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Thoreau has preferences for consumption goods (C) and time spent on leisure (L). The utility function is u(C, L) = CL. The household also has a home production technology summarized by a production function. The production function produces consumption goods with labor (l) according to f(l) = 100√ l. Time spent on leisure and labor adds up to 24, L + l = 24. a) How much time will Thoreau spend in leisure? How many units of consumption good will he produce? b) Using the production function from part a), what is the marginal product of labor at the amount of labor in part a)? c) Now suppose that there is a competitive firm with the production function f(l) = 100√ l. The wage (w) is equal to the marginal product of labor from part b) and the price of output is 1. What is the profit maximizing demand for labor and amount of output? What is the profit? d) Let π be the profit from part c. Prices are also the same as in part c). Now suppose that Thoreau has decided to rejoin civilization. He now owns a firm with the production function f(l) = 100√ l and receives its profits. He can also provides some of his time to labor markets. His budget constraint is C + wL = 24w + π. How much leisure time and consumption goods will he provide. e) Now consider an economy that consist of 10 consumers that are identical to Thoreau who each own one firm like Thoreau’s firm. Prices are the same as in part c). Show that both the labor market and the consumption good market clear at these prices. That is the sum of demand for leisure time from the consumers and demand for labor time from the firms equals the total hours which is 240. And the supply and demand for consumption goods are equal.
Elucidate a process under which the competing oligopolists can divide the cake so that the two consumers (who are also the producers) are protected from the downfalls of consumers in oligopolistic markets.
Consider the case of extremity selection, where both the most skilled and the least skilled from a source country choose to migrate. In the Roy Model, what must the graph of the return to skill on the two countries look like to generate this scenario..
Why do the soft technologies open more opportunities for women? To what extent have these technologies impacted the perceptions of men’s and women’s roles in the economy, within marriage, and in society as a whole?
Suppose the interest rate on 6-month treasury bills is 7 percent per year in the United Kingdom and 4 percent per year in the United States.
gdp per capita ppp current international for sub-saharan africa and uganda between the years 1980 and 2010.1. for
Summarize Walmart’s history, the economic, social, and political forces that affect it most. B) Present recent and current operating results (financial performance) data in a table. C) Present a brief SWOT analysis (Strengths, Weaknesses, Opportuniti..
What are the issues related to exchange rates - their impact on national economies when they change, their different equilibrium concepts (PPP and IP), how governments manage them (fixed or flexible or in-between)?
Suppose that a firm's fixed proportion function is given by q = (min{k,l})^.5. write the short run maximimization problem and derive the 1st order condition. If the wage is w=1 and the price of output is p=4, how much labor will the firm demand in th..
Monopoly Price is the same level where MR meets MC. Monopoly Demand is the Average Revenue. Airline Ticket is the Peak-Load Pricing. Electricity is the Intertemporal Pricing. Amusement Park fees are the Two-Parts Tariffs.
In the 1960’s a group medical practice (Health Insurance Plan or HIP) undertook a large scale randomized trial to evaluate the effectiveness of mammography. The researchers followed the subjects for five years and recorded the number of deaths due to..
All workers face tradeoffs. Self-selection allows workers to exploit these tradeoffs when choosing jobs, thus maximizing utility. One trade off is between pay and safety. Some workers are willing to take a hazardous job if it is accompanied by higher..
Principle theory of management. Where does the Coast Guard fit into the mix? What are the classes of crimes? Why does the security manager need to understand them?
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