Firm with two inputs of production-labor and capital

Assignment Help Business Economics

Reference no: EM131009594

1. Suppose there is a firm with two inputs of production, labor (L) and capital (K), with associated prices w and c, respectively. Also assume that the firm faces competitive input and product markets and that the two inputs are gross substitutes in production. Show graphically that long-run labor demand decreases as wages increase. What happens to the long-run demand for capital? Be sure to show the scale and substitution effects of a wage increase on the demands for labor and capital.

2. Describe and show graphically, using supply and demand curves, what the neo-classical view of labor markets implies should happen to employment in response to an increase in the federal minimum wage. What happens to the employment of low wage workers? What happens to the aggregate earnings of low wage workers if the elasticity of the labor demand curve is greater than one in absolute value?

Reference no: EM131009594

Questions Cloud

Compute the nominal GPD and real GDP : Compute the nominal GPD and real GDP? Using the quantity of money equation, what happens to the money supply if velocity of money is constant but price level decreases by 3 % and the real GDP increases by 8%? What would the money supply (M) be if vel..

Calculate the equilibrium price and quantity of gold : Suppose an economy uses gold as commodity money. Consider the market for gold with the following Demand for Gold as Money: GD;M = 80 – 1/4*V Demand for Gold for Nonmonetary use: GD;NM = 15 – 1/4*V Supply of gold: GS = 35 + 1/2*V where V is the price ..

What is the remaining balance that must be paid off : An firm borrowed $169,000 to remodel their office. The load was to be paid back in equal monthly payments over 30 years at 4% interest, compounded monthly. After 16 years, the firm wants to pay off the loan. What is the remaining balance that must be..

Explain principles related to being an ethical team builder : Explain principles related to being an Ethical Team Builder. Compare and contrast with what is going on in a previous or current organization that you have worked with.

Firm with two inputs of production-labor and capital : Suppose there is a firm with two inputs of production, labor (L) and capital (K), with associated prices w and c, respectively. Also assume that the firm faces competitive input and product markets and that the two inputs are gross substitutes in pro..

A perfectly competitive firms marginal revenue : A perfectly competitive firm's marginal revenue :

Provided input on automobile production techniques : Chrysler engineers helped Toyota develop its Sienna minivan. In return, Toyota provided input on automobile production techniques to Chrysler. Why do you think Chrysler was willing to share its minivan know-how with a key competitor?

Revenue function relating total revenues to quantity sold : Suppose the market demand for a good is described by the demand function P = 160 - 2Q. It follows that the total revenue function relating the total revenues (TR) to the quantity sold (Q) is:

Part of the overall budget process : Welfare is a contentious topic in America, but it’s just part of the overall budget process. In essay form, explain how the federal budget is divided. Which of those categories fluctuates (give an example) and which is fixed?

User Account

All Pages