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Third Problem The short-run production function of a competitive firm is given by f(L) = 6L 2/3 , where L is the amount of labor it uses. The cost per unit of labor is w = 6 and the price per unit of output is p = 3. 1. Plot a few points on the graph of this firm’s production function and sketch the graph of the production function, using blue ink. Use black ink to draw the isoprofit line that passes through the point (0, 12), the isoprofit line that passes through (0, 8), and the isoprofit line that passes through the point (0, 4). 2. What is the slope of each of the isoprofit lines? 3. How many points on the isoprofit line through (0, 12) consist of inputoutput points that are actually possible? 4. Make a squiggly line over the part of the isoprofit line through (0, 4) that consists of outputs that are actually possible. 5. How many units of labor will the firm hire? How much output will it produce? If the firm has no other costs, how much will its total profits be? 6. Suppose that the wage of labor falls to 4, and the price of output remains the same. Will the firm increase its output?
Note that the inverse demand functions for the high-valuation and low-valuation consumers in Figure 6.4 is p(q) = 16 − q and p(q) = 12 − q, respectively. If the monopolist could tell the two consumer types apart, what are the optimal block pricing co..
Why do some workers make more money than others? Must everyone make the same wage? Explain your answers using labor market equilibrium.
An economy consists of 100 households. The first 30 households (group A) have $30,000 of income each in period 1, and $50,000 of income each in period 2. The second 70 households (group B) have $40,000 of income each in period 1, and $20,000 of incom..
Now suppose the economists allow for crowding out. Illustrate what would their new estimate of the MPC be larger or smaller than their initial one.
1. in recent years consumption spending by households has accounted for about 70 of the total spending aggregate demand
If the market price of suits is constant, illustrate what is the shutdown level of output. What is the minimum price the firm can accept.
Compute the marginal tax rate as income rises from $100,000 to $200,000. Compute the corresponding marginal tax rates for the regressive and progressive tax systems.
In the short run, the price at which a firm's total revenues equal its total costs is?
Assume demand is given by: Qd = 80 - 4p. Assume supply is given by Qs = 40. What is the elasticity of supply? What is the market equilibrium?
Elucidate how an individual buying a car would prefer a free GPS system to a free leather seat upgrade.
The most likely reason that oil prices spiked during 2007-2008 was because
Working at home (preparing meals, taking care of children is not counted as part of GDP. Such work also doesn't constitute employment in labor- market statistics. Calculate the measured employment and unemployment and the measured labor force for eac..
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