Calculate the user cost of capital of a machine

Reference no: EM131806217

Question: 1. The Widget Company has the following production function. Number of Workers 0 1 2 3 4 5 Number of Cases produced 0 9 17 24 30 35 If widgets sell for $6 each and the wage rate is $33, how many workers will the company hire?

2. Zowie! Surfboards has the following production function. Number of Workers 1 2 3 4 5 Number of Surfboards Produced 12 21 29 36 42 If surfboards sell for $30 and the nominal wage rate is $200, how many workers should the firm employ?

3. The marginal product of labor (measured in units of output) for Expando Corp. is given by MPN = A(400 - N) where A measures productivity and N is the number of labor hours used in production. Suppose the price of output is $3 per unit and A = 2.0. What will be the demand for labor if the nominal wage is $18?

4. The marginal product of labor (measured in units of output) for Relient Corp. is given by MPN = A(200 - N) where A measures productivity and N is the number of labor hours used in production. Suppose the price of output is $3 per unit and A = 2.0. What will be the demand for labor if the nominal wage is $30?

5. What is the participation rate if there are 125 million people in the labor force, 100 million people employed, and 25 million not in the labor force?

6. Last year, Linus earned a salary of $25,000 and he spent $24,000, thus saving $1000. At the end of the year, he received a bonus of $1000 and he spent $500 of it, saving the other $500. What was his marginal propensity to consume?

7. Calculate the user cost of capital of a machine that costs $5000 and depreciates at a rate of 25%, when the nominal interest rate is 10% and the expected inflation rate is 5%.

Reference no: EM131806217

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