Production function, The capital stock is K= 25. The labor

Production function

Assignment Help Other Subject

Reference no: EM13321970

Suppose that the production function is y= 9k^0.5 N^0.5.

With this production function, the marginal product of labor is MPN= 4.5K^0.5 N^-0.5.

The capital stock is K= 25. The labor supply curve is NS= 100[(1-t)w]^2, where w is the real wage rate, t is the tax rate on labor income, and hence (1-t)w is the after-tax real wage rate.

a. Assume that the tax rate on labor income, t, equals zero. Find the equation of the labor demand curve. Calculate the equilibrium levels of the real wage and employ-ment, the level of full-employment output, and the total after-tax wage income of workers.

b. Repeat part (a) under the assumption that the tax rate on labor income, t, equals 0.6.

c. Suppose that the minimum wage of W= 2 is imposed. If the tax rate on labor income, t, equals zero, what are the resulting values of employment and the real wage? Does the introduction of the minimum wage increase the total income of the workers, taken as a group?

Reference no: EM13321970

Questions Cloud

Example of how bronze casting reached new heights : The _____ is an example of how bronze casting reached new heights in China even as the Roman Empire began to disintegrate.

Defined as the size of the opening in the lens : The idea of film as art flourished after World War II with the likes of auteurs such as _____. defined as the size of the opening in the lens when exposing a photograph to light. After improving his photographic process by decreasing the exposure tim..

Information on the history of musical works : I need information on the history of musical works that were originally written for orchestra and later transcribed for winds/band. List of publishers that did this, List of such pieces, anything

Made in brute force algorithm for the convex hull problem : what modification needs to be made in brute force algorithm for the convex hull problem to handle more than two points on the same straight line?

Production function : The capital stock is K= 25. The labor supply curve is NS= 100[(1-t)w]^2, where w is the real wage rate, t is the tax rate on labor income, and hence (1-t)w is the after-tax real wage rate.

Whats the range of national ecological footprints : Per capita, whats the range of national ecological footprints from largest to smallest? What are the components that go into the footprint calculation for a nation? What are the relative contributions of developed and developing nations to the global..

Asymmetrical relationships : Using yourself as the subject, give an example of each of the following asymmetrical relationships:

Establishing causality is difficult whether conclusions : Establishing causality is difficult whether conclusions have been derived inductively or deductively. Explain and elaborate on the impications of this statement.

Exploratory and formal studies-descriptive-causal studies : Distinguish between the following-Exploratory and formal studies, Experimental and ex post facto research designs, Descriptive and causal studies

User Account

All Pages