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Assume in a two-sector economy made up of agriculture and manufacturing, the government introduces a subsidy of y per hour on labour in the manufacturing sector. What will be the effect of the policy on the equilibrium wage, total employment as well as employment in agriculture and manufacturing
Show that the quantity of labor(L) and capital(K) that a firm demand decreases with a factor’s own factor price (w for labor and r for capital) and increases with the output price (P) when the production function is a Cobb-Douglas of the form 𝐪 = 𝐀𝐋𝛒𝐊𝛗
XYZ Co. operates in a competitive market. Its Total Product (Q) is given as Q=f(L)= 2L, and it takes the wage and price as given. Derive the firm's short-run demand for labor as a function of w and p. How much labor will the firm hire if W=₵20 and P=₵100?
1. Give an example of a negative externality and a positive externality. Explain why market outcomes are inefficient in the presence of externalities.
2. Give an example of a private solution to an externality. What is the Coase theorem? Why are private economic actors sometimes unable to solve the problems caused by an externality?
3. List some of the ways that the problems caused by externalities can be solved without government intervention.
4. Imagine that you are a nonsmoker sharing a room with a smoker. According to the Coase theorem, what determines whether your roommate smokes in the room? Is this outcome efficient? How do you and your roommate reach this solution?
5. Even if the externality issue is resolved using a private solution (Coase), can you think of other issues or problems that would stem from the situation? (For example, how do you determine to whom to give rights?)
A television manufacturer produces x sets per week so that the total cost of production is given by the relation TC=q^3-195q^2+6600q+15,000. Find how many television set must be manufactured per week to minimize total cost.
If TC=0.01x2+5x+100 is the cost function for x items of a product, at what level of production, x is there minimum average cost? What is the minimum average cost?
II. Assume the following prices of Good Y and the quantities purchased at these prices. The Total Fixed Cost of the firm is P6,000 and the cost of Direct Materials is P0.80 per unit and that of direct labor is P1.10 per unit. Complete the table.
XYZ Co. operates in a competitive market. Its Total Product (Q) is given as Q=f(L)= 3L, and it takes the wage and price as given. Derive the firm's short-run demand for labor as a function of w and p. How much labor will the firm hire if W= ¢25 and P=¢ 150?
Suppose a firm produces according to the production function Q=AL""K, and faces wage rate Ç20, a rental cost of capital ¢10, and sells output at a price of ¢40. a. Obtain and expression for the factor demand functions if A=2. b. Compute the profit-maximizing factor demands for capital and labour if A=2.
In the short run, a competitive firm has a production function, Q=f(L) = 2.6667L. The output price is $8 per unit and the wage is $5 per hour. Find the short- run labor demand curve of the firm.
