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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.
Calculate the velocity of money in 2007 and 2014 - Suppose the velocity of money remained constant between 2007 and 2014 and that real GDP in 2014 was equal to its actual value. What would be the value of the GDP deflator?
Involving the e-Activity's testimony regarding the FBI's efforts to investigate IP theft, identify two best practices owners / executives can implement to protect against possible IP theft.
Classify each of the following as a supply or demand shock. Use a graph to show the effects on inflation and output in the short run and the long run - show what the effect would be in the short run. Describe the effects on inflation and output.
Suppose that you could at zero cost monitor the efforts of the two workers. Would you want to make them work hard, or is it better to have them loaf? What payments would you offer to employer?
After viewing the video multimedia resources, reflect on the challenges facing the U.S. labor force due to outsourcing of jobs overseas.
george has 28.00 to spend on soda pop and pretzels. determine the number of cans of soda pop and pretzels that will be
Describe in your own words how a perfect competitor maximizes its profit, and why its profit is zero in the long run?
At the equilibrium GDP for a private open economy:
We're looking at the market for cat food. When the price is $10, the quantity sold is 1000 bags. When the price drops 10%, the quantity sold increases 30%.
Profit maximization is theoretically the most sound but practically unattainable objective of business firms. In the light of this statement critically appraise the Baumol’s sales revenue maximization theory as an alternative objective of the firm.
Identify each of the following policies as either fiscal policy or monetary policy and explain why for each question. The cash for clunkers program which provided a tax credit for purchasing a new vehicle.
identify whether each of the following raises labor demand or lowers labor supply includes slowing labor supply growth
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