Reference no: EM133083562
An economy can produce good 1 using labor and capital and good 2 using labor and land. The total supply of labor is 100 units. Given the supply of? capital, the outputs of the two goods depend on labor input as? follows:
|
Labor Input to Good 1
|
Output of Good 1
|
Labor Input to Good 2
|
Output of Good 2
|
|
0
|
0.0
|
0
|
0.0
|
|
10
|
25.1
|
10
|
39.8
|
|
20
|
38.1
|
20
|
52.5
|
|
30
|
48.6
|
30
|
61.8
|
|
40
|
57.7
|
40
|
69.3
|
|
50
|
66.0
|
50
|
75.8
|
|
60
|
73.6
|
60
|
81.5
|
|
70
|
80.7
|
70
|
86.7
|
|
80
|
87.4
|
80
|
91.4
|
|
90
|
93.9
|
90
|
95.9
|
|
100
|
100
|
100
|
100
|
The marginal product of labor curves corresponding to the production functions? (not given in the? problem) are as? follows:
|
Workers Employed
|
MPL in Sector 1
|
MPL in Sector 2
|
|
10
|
1.51
|
1.59
|
|
20
|
1.14
|
1.05
|
|
30
|
1.0
|
.82
|
|
40
|
.87
|
.69
|
|
50
|
.78
|
.60
|
|
60
|
.74
|
.54
|
|
70
|
.69
|
.50
|
|
80
|
.66
|
.46
|
|
90
|
.63
|
.43
|
|
100
|
.60
|
.40
|
a. Suppose that the price of good 2 relative to that of good 1 is 2. For ?simplicity, define P1? = 1 and P2? = 2. Given that the total labor allocated between these sectors must sum to? 100, determine graphically the wage rate and the allocation of labor between the two sectors.
?1.) Using the multipoint curve drawing? tool, draw the demand curve for labor in sector 1 by plotting all eight points corresponding to 10 workers employed up to 90 workers employed. Properly label this curve.
?2.) Using the multipoint curve drawing? tool, draw the demand curve for labor in sector 2 by plotting all eight points corresponding to 10 workers employed up to 90 workers employed. Properly label this curve.
?3.) Using the point drawing? tool, plot the equilibrium wage and quantity of labor employed in sector 1. Properly label this point. Carefully follow the instructions above and only draw the required objects.