Reference no: EM13988216
1. An expansion of production function is to separate workers based on their quality as below.
Y = z(K + 15000Lu)0.6L0.4,
where Y is output, z is TFP, K capital, Lu unskilled labor and Ls skilled labor.
The expression for the marginal product of skilled and unskilled labor are given below:
MP Lu = 0.6·z(K + 15000Lu)-0.4L0.4 ·15000
MP Ls = 0.4·z(K + 15000Lu)0.6L-0.6
In this production function capital and skilled labor complement each other, while capital and unskilled labor are substitutes. The picture you can have is that a trained operator using a bulldozer replacing a group of brawny man with shovels.
(a) In year 1990, z = 500, K = 30000, Ls = 1, Lu = 1. Calculate the marginal product of each labor type.
(b) In year 2010, z = 700, K = 65000, Ls = 1, Lu = 1. Calculate the marginal product of each labor type.
(c) Calculate the accumulated percentage increase of marginal product for each type of labor during this 20 year period.
2. A firm has production function Y = 150N0.6. Suppose that w = 30.
(a) How much labor will this firm hire and how much can it produce?
(b) Suppose that the government subsidizes employment. That is, the government pays the firm 1 units of consumption goods for each unit of labor that the firm hires. (Direct subsidy to firms is rare. There are many federal and state job creation related grants and tax breaks that indirectly lower the cost of hiring.) Determine the effect of the subsidy on the firms hiring decision. (Adapted from chapter 4 page 135, Q12.)
(c) In the course of producing its output, this firm causes pollution. The government passes a law that requires the firm to stop polluting, and the firm discovers that it can prevent the pollution by hiring 0.2 workers for every worker that is producing output. Let N denote the amount of labor in production. The total employment at the firm is 1.2N . Cost of hiring a production worker includes both his wage and the wage of the worker who cleans after him, hence is 1.2w. Determine the effect of the pollution regulation on the firms profit-maximizing choice of labor input. (Adapted from chapter 4 page 136 Q15.)
3. Nemo has a preference where consumption and leisure time are perfect substitutes. His utility function is given by u(c, l) = c + 0.6l. Suppose that w = 0.7 and Π = 0.85. Total time endowment is normalized to be 1. Determine his optimal choice of consumption and leisure.
|
Discuss the columbian exchange what was exchanged
: What were the immediate consequences of the encounters between the Old and New Worlds?
|
|
With so many different stakeholders in health care system
: With so many different stakeholders in the health care system, many with powerful political lobbies, it is understandable that the government was unable, until the Patient Protection and Affordable Care Act of 2010, to address the problems of cost, a..
|
|
Main ethical criticisms of nestle marketing
: 1. Set out the main ethical criticisms of Nestlé's marketing of infant formula. Which consumer rights are these practices failing to respect? 2. Many of the criticisms of Nestlé's practices stem from the argument that consumers in the developing w..
|
|
What is meant by the term marketing concept
: What is meant by the term marketing concept? How has this concept been extended into the professional selling models?
|
|
Determine his optimal choice of consumption and leisure
: Determine his optimal choice of consumption and leisure and calculate the marginal product of each labor type.
|
|
Encompasses what we commonly refer to as technology
: Discuss what you believe encompasses what we commonly refer to as technology. What is it? is there something commonly called technology that isn't technology? How do we know something is technology? What are the characteristics of technology? Is it a..
|
|
Describe the three methods used to allocate joint costs
: Describe the three methods used to allocate joint costs. What are the advantages/disadvantages of each allocation method? Which method would you recommend? Why? Support your position with evidence from the text or external sources.
|
|
Patient protection and affordable care act
: A key aspect of the Patient Protection and Affordable Care Act is rewarding hospitals for strong performance and penalizing them for quality issues, such as high infection rates and high readmission rates to the facility. Explain the details of how P..
|
|
American red cross ethical dilemmas
: What are some of the reasons for the American Red Cross's ethical dilemmas, and how can the organization guarantee that these problems will not recur in the future?
|