of 3 The nation of Ectenia has 20 production function and the marginal product of labor...
e STEP: 2 of 3 The nation of Ectenia apple orchards, which sell apples at the world price of $2 per apple. The following equations describe the production function and the marginal product of labor in each orchard Q- 1001-L2 MPL -100-2L where Q is the number of apples produced in a day, L is the number of workers, and MPL is the marginal product of labor. Suppose the world price of apples doubles to $4 per apple. What is...
A firm's production function is Q = 70L0.6 K0:3. Its marginal product of labor is thus MP2 = 42L-0.4 0.3 and its marginal product of capital is MPK = 21L0.6 K-0.7. a. What returns to scale does this production function exhibit: constant, increasing, or decreasing? Show mathematically. b. Suppose the wage rate is $12 and the rental rate for capital is $48. Show that the firm is not minimizing cost when it employs 40 workers (L) per day and 15...
Problem 3 - Labor Market & Taxes PROBLEM 3: LABOR MARKET AND TAXES (20 POINTS) Suppose a worker has preferences over consumption and leisure that can be repre- sented by the following utility function: U = ln (C) + In (1) There are 16 hours per day available for leisure (1) and labor (L) (the remaining 8 hours are for sleeping). The hourly wage is w, and assume that the price of each unit of consumption is $1. The only...
Labor Total product (workers) (wands per day) The table above shows Randy's Wands' short-run production function. Randy hires workers at a wage rate of $120 a day and his total fixed cost is $400/day. a) What is the marginal product of the 3rd worker? b) What is Randy's average fixed cost if 25 wands are produced? c) What is Randy's average variable cost if 60 wands are produced? d) What is Randy's marginal cost of producing the 35th wand? e)...
The following graph shows the labor market in the fast food industry in the fictional town of Supersize City. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Labor in the Fast-Food Industry 6 Wage (Dollars...
Problem #3: Long-Run Labor Demand and Factor Substitutability Suppose there are two inputs in the production function, labor (L) and capital (K), which can be combined to produce Y units of output according to the following production function: 7. Suppose the firm can choose whatever combination of capital (K) and labor (L) it wants to produce 600 units. Suppose the price of capital is S1,000 per machine per week. What combination of inputs (K and L) will the firm use...
1. Consider a risk-neutral firm that operates for two periods with a production function that depends only on the amount of labor hired: f(L) = 100L 1/2 . Assume that the interest rate (r) is equal to 5%. The wage in the first period is equal to $10 per hour, but the second period’s wage is either $10 (with probability 0.4) or $20 (with probability 0.6). The current price for the firm’s output is P 0 =$20. In the second...
4. Profit maximization Consider Live Happley Fields, a small player in the strawberry business whose production has no individual effect on wages and prices. Live Happley's production schedule for strawberries is given in the following table: Labor (Number of workers)Output (Pounds of strawberries)0019217324430535Suppose that the market wage for strawberry pickers is $100 per worker per day, and the price of strawberries is $18 per pound. On the following graph, use the blue points (circle symbol) to plot Live Happley's labor demand curve when...
Consider Live Happley Fields, a small player in the strawberry business whose production has no individual effect on wages and prices. Live Happley's production schedule for strawberries is given in the following table: Suppose that the market wage for strawberry pickers is $200 per worker per day, and the price of strawberries is $13 per pound. On the following graph, use the blue points (circle symbol) to plot Live Happley's labor demand curve when the output price is $13 per pound. Note: Remember...
3. A globalized production process has the following four stages, shown with the ratio of highly skilled (human capital) to low skilled labor (HIL) in each activity A) Research and development; product design B) Assembly of basic parts and components C) Transformation of parts and components into semi-finished products D) Final assembly, packaging, distribution, and sales of finished goods 1/4 1/2 3/4 The two countries are South Korea and Vietnam; you can assume that Vietnam is the low wage country...