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Thoreau has preferences for consumption goods (C) and time spent on leisure (L). The utility function is u(C, L) = CL. The household also has a home production technology summarized by a production function. The production function produces consumption goods with labor (l) according to f(l) = 100√ l. Time spent on leisure and labor adds up to 24, L + l = 24. a) How much time will Thoreau spend in leisure? How many units of consumption good will he produce? b) Using the production function from part a), what is the marginal product of labor at the amount of labor in part a)? c) Now suppose that there is a competitive firm with the production function f(l) = 100√ l. The wage (w) is equal to the marginal product of labor from part b) and the price of output is 1. What is the profit maximizing demand for labor and amount of output? What is the profit? d) Let π be the profit from part c. Prices are also the same as in part c). Now suppose that Thoreau has decided to rejoin civilization. He now owns a firm with the production function f(l) = 100√ l and receives its profits. He can also provides some of his time to labor markets. His budget constraint is C + wL = 24w + π. How much leisure time and consumption goods will he provide. e) Now consider an economy that consist of 10 consumers that are identical to Thoreau who each own one firm like Thoreau’s firm. Prices are the same as in part c). Show that both the labor market and the consumption good market clear at these prices. That is the sum of demand for leisure time from the consumers and demand for labor time from the firms equals the total hours which is 240. And the supply and demand for consumption goods are equal.
If there were only one seller, illustrate what would be the equilibrium price and quantity.
What type of organizational structure is the company currently using?
Calculate the price of elasticity of demand for paint and show your calculations. decide whether the demand for paint is elastic,unitary elastic, or inelastic. explain your reasoning and interpret your results.
smaller multiplier means that change in government purchases of goods and services, government transfers, or taxes necessary to close an inflationary or recessionary gap is larger. How can you explain this apparent inconsistency.
One Tuesday the government announces two new policies. First, you must pay a head tax (lump sum tax) of $3 a day. Second, the government will subsidize the purchase of apples (but not of oranges) so that the price of an apple falls to 50 cents. Draw ..
Calculate national income form the following figure-consumption: 200 billion. if there were 80 million people in this country, what would the GDP per-capita be? if all prices were to double overnight, what would happen to the values of real and nomin..
q.assume that in 1998 the following prevails in the republic of nurd y200 g0 c160 t0 s40 iplanned30assume that
Alice and Barbara are playing a one-stage guessing game. Each must choose a number between 1 and 8 (inclusive). Alice’s target is to match Barbara’s number. Barbara’s target is to name twice Alice’s number. Each receives $10 minus a dollar penalty th..
ON a graph that has risk probability on the vertical axis and fullness of insurance on the horizontal access (on the origin, person is uninsured. As one moves gradually to the right, insurance starts becoming available from small benefits, to better ..
What is the difference between the optimal level of total consumption minus the amount of total consumption generated by the market
Explain why the R-squared from the regression from F test will always be at least as large as the R-square from the BP regression.
How much income gets you into the top quartile or quintile. Discuss the issues of regressive, proportional, and progressive taxation.
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