Calculate equilibrium levels of the real wage and employment

Reference no: EM13222226

The production function is Y=9K^.5N^.5.
MPN =4.5K^.5N^-.5
Capital Stock is K=25
Labor Supply curve si NS = 100[(1-t)w]^2 where w is real wage rate, t is tax rate on labor income

Question:
1. Assume tax rate on labor income t=.6. Find the equation of the labor demand curve. Calculate equilibrium levels of the real wage and employment, the level of full employment output, and the total after tax wage income of workers.

2. Suppose that minimum wage of w=2 is imposed. If t=0, what are the resulting values of employment and the real wage?

Reference no: EM13222226

Questions Cloud

Establish the foundational areas for growth potential : You may use the format you choose (Word, Excel, Visio, Project). Please support your work through use of a minimum of 3 sources using APA format. The paper should be 3-5 pages.

Explain what is the corporate bond rate : Consider the following four debt securities, which are identical in every characteristic except as noted: W: A corporate bond rated AAA X: A corporate bond rate BBB Y: A corporate bond rated AAA with a shorter time to maturity than bonds W and X Z..

Explain solution is evaporated to half its volume : A solution that is known to contain come of the soluble ions from group 1 and no other cations or inteferring substances, 12 drops of 6M hydrochloric acid is added and no precipoiate forms.To clear solution is evaporated to half its volume and 12 ..

Which dispatching rule would you select : Complete the table below. (Show your supporting calculations)

Calculate equilibrium levels of the real wage and employment : Assume tax rate on labor income t=.6. Find the equation of the labor demand curve. Calculate equilibrium levels of the real wage and employment, the level of full employment output, and the total after tax wage income of workers.

How many kilograms should they place in this warehouse : How many kilograms should they place in this warehouse before the 2011 growing season?

Analyze the effects of the two separate policies : The US government has two different methods to deal with illegal drug use. First, the government has tried a "war on drugs", with the idea of keeping illegal drugs out of the country. Second, the "just say no" campaign has been used to make indivi..

Shift of american health insurance policies : The Shift of American Health Insurance Policies - How the Changes Affect Our Economy, What health program is better financially and morally?

Explain hydrochloric acid is added and no precipoiate forms : To a solution that is known to contain come of the soluble ions from group 1 and no other cations or inteferring substances, 12 drops of 6M hydrochloric acid is added and no precipoiate forms.To clear solution is evaporated to half its volume and ..

User Account

All Pages