Answer the question regarding the labor market model when r(0) = ²0 and 0 € {1,2} with Prob(0 = 1) = Prob(0 = 2) = 1/2, where r(0) denotes the reservation wage of a worker with productivity 0. (1) Derive all competitive equilibria in the market. (2) Discuss the efficiency for each competitive equilibrium obtained in
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- Microeconomics 2 - Factor Market - Pareto Optimum Consider an economy in which only 2 factors are capital (K) and labor (L) whose total supply is 100 labor and 100 capital. They are used by only firm that produces only 2 final goods X and Y. The technology describing the production process of each of goods is described by the following production functions: X = 5 Lx + 3 Kx and Y = 1/3 Ly Ky It’s known that the factors have been allocated in such a way that the initial endowment is: Kx = 75; Lx = 85; Ky = 25 and Ly = 15. With these data we ask: Obtain the contract curve corresponding to the production of this economy. Does the starting point constitute a PARETO OPTIMUM? Represent the available information in an Edgeworth Box. Obtain the production possibilities frontier (PFC) curve. Locate the initial endowment THANKS :DSuppose the local economy experiences an influx of both skilled and unskilled workers, what will happen to prices of goods and services? Group of answer choices Since this increases the supply of labor, prices and wages both decrease. Since this increases the demand for labor, prices and wages both increase. Since this decreases the supply of labor, prices and wages both decrease. Since this increases the marginal product of labor, prices and wages both decrease. A worker on a Texas oil rig is likely to earn _______ than a reception because _________. Group of answer choices less; the job has unattractive characteristics. more; the job is more fun. more; the job is more prestigious. more; the job is more dangerous. please answer two questionsQuestion You are the manager of a firm and you are required to optimize the Cobb Douglas function given the following parameters. The maximum amount of money available is$1600 where the price of K = 12 and the price of L=6. That is PK=12 and PL=6. The function is given as q=K0.4+L0.6. What is the constraint equation? a. none of the above b. 12K - 6L = 1600 c. 12K/6L = 1600 d. 12K+6L=1600
- Instacart offers consumers a convenient form of home delivery service for groceries. Units of output (q) are individual grocery deliveries/day. Grocery deliveries are achieved through the use of delivery trucks (K) and workers (L). The price of labor (w) is $10/worker. Use the provided graph to answer the question below. K 16 15 upunp98 14 13 12 11 10 7 6 5 4 32 1 A B D q=100 q=50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 L Which of the following statements about Instacart's MRTS at input mixes A and B is incorrect? Instacart's MRTS is greater at input mix A, relative to its MRTS at input mix B Instacart's MRTS is greater at input mix B, relative to its MRTS at input mix A Instacart's MRTS is the same at both input mix A and B Not enough information is provided to compare the MRTS at input mixes A and BSuppose that in a competitive output market, firms hire labor from a competitive labor market (so that the profit maximization conditions for hiring labor are as we discussed in class). If a profit-maximizing firm in this market gets an improvement in technology that increases the marginal product of labor for any given unit of labor it employs, and if the market wage stays constant, we would expect the firm to Group of answer choices a) offer a lower wage and hire fewer units of labor. b) hire more units of labor. c) do none of the other options. d) keep the number of units of labor the same. e) hire fewer units of labor (i.e., workers) because it could produce more than before with fewer people.Consider a Sraffa system that describes production with a surplus. Assume that the whole of the wage is variable. The number of commodities in the system is ?. Some are non-basic commodities. . State the economic meaning of the viability condition and express it mathematically. . Assume that the viability condition is satisfied and the rate of profit is given exogenously at a level that is lower than the maximum rate of profit. Explain, with the help of the relevant theorem, why the solution for prices must be nonnegative. NOTE: You need to use only three equations, one for specifying the numeraire, the second for expressing the final solution of the price equations, and third for expressing the condition for nonnegative prices.
- Suppose that the production of a certain product only requires one input, labor, and that the additional production diminishes by half after the last input. On the other hand, the demand of the good can be described using the equation Q = 10000 – P/10. The total product of the second unit of labor is 3,000 unite. Finally, each additional worker requires P1,000,000. Given the following information, answer the following questions: What is the marginal revenue product of the third unit of labor? Answer: 500 How would you characterize the marginal revenue product of labor? How would you characterize the labor market that this firm faces?Instacart offers consumers a convenient form of home delivery service for groceries. Units of output (q) are individual grocery deliveries/day. Grocery deliveries are achieved through the use of delivery trucks (K) and workers (L). The price of labor (w) is $10/worker. Use the provided graph to answer the question below. K 16 15 HERE ∞0654 14 13 12 11 10 9 8 7 32 2 1 A B D q=100 q=50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 L Instacart is currently operating in the short run with its capital stock (its trucks) fixed at ( K = 3 ). Let's say it wants to expand its production up to 100 grocery deliveries/day. What is Instacart's short run total fixed cost of producing 100 grocery deliveries/day? (Do not use dollar signs [$] for your answer, only write the numerical value of the firms' SR TFC at q = 100).(3) Consider a production of a good, X. The market for X is competitive and thus there are many firms producing X. The production of X requires only labour inputs. Moreover, the marginal product of labour for X is constant. However, there are exactly two kinds of workers in the population. One kind has a constant marginal product worth $20 and the other kind has a constant marginal product worth $15. The labour market is competitive and there are equal numbers of workers of each kind in the population. (a) Suppose that the price of X is $1 per unit. The equilibrium wage rate for high- productivity workers is $ workers is $ and the equilibrium wage rate for low-productivity (b) Consider the case of information asymmetry: each firm cannot directly tell the difference between the two kinds of workers. Even after it has hired them, it won't be able to monitor their work closely enough to determine which workers are of which type. In this case, one wage rate will be offered to both kinds of…
- Consider the Labor Economics Question. This will provide insight into the idea of the optimal number of workers and the value of the marginal product of labor. If wages in the restaurant is $16.80 per hour and the price of a Hamburger is $8.30 and the production function for the workers is: Q = 11L – 0.25L2 How many workers should Your Restaurant employ during the lunch hour to maximize profits? 1 Point (note—the value of the marginal product of labor and the marginal revenue product are the same) We maximize profits which are total revenues less total costs:Assume that Donnell Corp. is currently producing 500 units of output per period, using 25 units of labor and 20 units of capital. Values for the marginal product of each input and the prices of the inputs are as follows: MPK = 100, MPL = 200, w = 2, and r = 3. Given the information above, which of the following is true? a. The firm is currently using the optimal levels of capital and labor. b. The firm should increase labor and reduce capital usage. c. The firm is not using the optimal levels of capital and labor, and it is impossible to determine the optimal levels from the given information.Instacart offers consumers a convenient form of home delivery service for groceries. Units of output (q) are individual grocery deliveries/day. Grocery deliveries are achieved through the use of delivery trucks (K) and workers (L). The price of labor (w) is $10/worker. Use the provided graph to answer the question below. K 16 15 14 13 12 ∞65EE 11 10 8 7 6 54 32 1 A B C q=100 9-50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 L Let's say that Instacart is now operating in the long run. If it is still producing 100 units of output, how many trucks will it choose to use? (Only write the numerical value for your answer. For instance, if you found that Instacart would not change the number of trucks used in the long run, your answer would just be 3.)