What is the expected wage in the city

Assignment Help Econometrics
Reference no: EM13185993

In China, three members of a family own a small business. They all work on the firm and they can hire up to two more people to work in their business. Each worker is paid $300. The total output per year depends on the number of members working in the business that year. Total annual income (or value of output) is represented by the following chart.

Number working on farm

1

2

3

4

5

Total Business Output (in $)

900

1700

2300

2700

2900

Each member of the family has the opportunity to migrate to the nearest city where there are two different types of jobs. Informal jobs are available to everybody and pay $200. Formal sector jobs are more difficult to get and pay $800. The probability of finding a job in the formal sector is 60%. For questions A-C, suppose that there are no costs of migration.

A) Suppose all three members of a family were to work in the business. How many workers should the family hire to maximize business revenue?

B) What is the expected wage in the city?

C) Show that the business maximizes total family income by sending two of their family members into the city, letting one stay on the farm and hiring two workers.

Reference no: EM13185993

Questions Cloud

Define the activation energy of a certain reaction : The activation energy of a certain reaction is 45.4kJ/mol. At 28 degrees celcius, the rate constant is 0.0150s^?1. At what temperature in degrees Celsius would this reaction go twice as fast?
Find the dimensions of the aquarium : The base of an aquarium with volume V = 215 is made of slate and the sides are made of glass. If slate costs five times as much (per unit area) as glass, find the dimensions of the aquarium that minimize the cost of the materials.
What is the average angle of the ramp with the horizontal : An access ramp rises 3.2 ft over a distance of 30 ft. What is the average angle of the ramp with the horizontal?
Compute the final temperature of the gas mixture : calculate the final temperature of the gas mixture. Assume the heat capacities of the gases are constant and are given in Appendix B of your text.
What is the expected wage in the city : Each member of the family has the opportunity to migrate to the nearest city where there are two different types of jobs. Informal jobs are available to everybody and pay $200. Formal sector jobs are more difficult to get and p..
Estimate the relative error in the calculated surface area : Estimate the relative error in the calculated surface area.
Find the work required to empty the tank : Find the work required to empty the tank by pumping the hot chocolate over the top of the tank. Note: the density of hot chocolate is delta = 1500 kg/m^3
Compute the van der waals correction terms to pressure : Calculate the van der waals correction terms to pressure and volume for Cl2 at STP. The values of the van der waals constants a and b are 6.49L^2-atm/mol^2 and 0.0562 L/mol,
Estimate the relative error in the calculated surface area : The circumference of a sphere was measured to be 73000 cm with a possible error of 050000 cm. Use linear approximation to estimate the maximum error in the calculated surface area. Estimate the relative error in the calculated surface area.

Reviews

Write a Review

Econometrics Questions & Answers

  What is profit maximizing price

Market research at Apple Corporation has shown that the demand function for its new iPhone is as follows: QA = 3 - 0.02PA + 0.0002I + 0.01PS where QA is the quantity demanded (in thousands) of iPhones, PA is the price of an iPhone, I is consumer i..

  Calculate the overall saving rate in sonrisa

The table below shows the probability that a mother in a given part of the income distribution (given by the row) will have a daughter in a given part of the income distribution (given by the column). So, for example, the daughter of a women with ..

  What would the optimal production subsidy be

Calculate the total effect on welfare of a tariff of 5 per unit levied on imports. Calculate the total effect of a production subsidy of 5 per unit. Why does the production subsidy produce a greater gain in welfare than the tariff? What would the opt..

  What is the expected equilibrium price

The demand curve and supply curve for a one-year discount bonds with a face value of $1,000 are represented by the following equations: Bd: Price=-0.6 Quantity +1140 Bs: Price= Quantity +700 a. What is the expected equilibrium price and quantity of ..

  What is the socially optimal number of flu shots

Assume that the marginal cost (supply) of influenza vaccinations is constant at $40. Assume that everyone in society has health insurance that pays 80% of all medical services, including flu shots. Assume first that the flu is not contagious. Defi..

  Does firm 10 produce at all in equillibrium

.What are the equlibrium quantities (q1, q2 %u2026 ,q10)?. A-q1, q2 %u2026 ,q10 = 2B-q1, q2, %u2026 ,q9= 2 q10=1/2c-q1, q2, %u2026 ,q9= 3/2 q10=1/2d-q1, q2, %u2026 ,q9, q10= 3/2e- q1, q2, %u2026 ,q9= 3/4 q10=1/2f-q1, q2, %u2026 ,q9= 3 q10=1/2g-non..

  Find the rate of return on a process

A packaging company needs to know the rate of return on a process which will cost $60,000, have an income of $25,000 per year, have an operating cost of $5,600 per year, and have a salvage value of $7,000 at the end of its five year life.

  Would max be as well off as he was before the tax

A tax is placed on x so that x now costs Max $2 while his income and the price of y stay the same. How much of good x does he now demand? Would Max be as well off as he was before the tax if when the tax was imposed, his income rose by an amount eq..

  Calculate the regression

In Milky Way Galaxy, a class of 2,000 students took a course in Astronomy. The 1st exam scores and final exam percentage reached earth, but transmission broke off after only a dozen students' scores were received.

  Find the maximum profit

A frim determines that X units of its product can be sold daily at P dollars per units per day is C(x) =120-1/2p and where the cost of producing X units per day is C(X)=10+30x A) Assuming that the production capacity is 40 units per day, determine..

  What is the optimal price for these two insurance options

As a dentist you find that a person's annual demand curve for appointments are P=500-50Q. The marginal cost for your service is $50 There are three ways you could charge for your services -Charge $50 each time someone makes an appointment -Sell an an..

  Find market price and quantities produced if firm 2 move 1st

Consider the same two firms as above with marginal costs 10 and 40, facing a demand p = 100 - q. a. Find the market price and quantities produced if firm 1 moved first, followed by firm 2 b. Find the market price and quantities produced if..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd