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Kalamma, a cloth trader owns a large garment factory on an isolated island. Kalamma's factory is the only source of employment for most of the islanders, and thus she acts as a monopsonist. The supply curve for garment workers is given by: L =90w, where L is the number of workers hired and w is their hourly wage. Assume also that Kalamma's labor demand (marginal revenue product) curve is given by: L = 500 - 50MRPL
a) How many workers will Kalamma hire to maximize her profits, and what wage will she pay?
b) Assume now that the government implements a minimum wage law covering all garment workers. How many workers will Kalamma now hire, and how much unemployment will there be if the minimum wage is set at $5 per hour?
c) Graph your results.
d) How does a minimum wage imposed under monopsony differ in results as compared with a minimum wage imposed under perfect competition? (Assume the minimum wage is above the market-determined wage.)
A monopolist with marginal cost c faces inverse demand function P(Q) = A- BQ, where 0 0. a. Calculate the competitive level of output. b. Calculate the monopoly price and output. Illustrate the monopoly equilibrium graphically.
Suppose you are the manager of Sunglass Hut operating in a competitive market. Your cost of production is given by TC = 100 + Q*Q, where Q is the level of output and TC is the total cost. The marginal cost of production is 2Q.
On July 1, Nancy paid $600,000 for a commercial building and an additional $150,000 for the land on which it stands. Four years later, also on July 1, she sold the property for $850,000. Compute the modified accelerated cost recovery system depr..
The Jenkis Tool Company estimated the following demand equation for it's product: QD=12,000-4,000 P Where P=price/unit QD=quantity demanded/year The firm's total costs are $4,000 when nothing is being produced.
Consider a Cournot duopoly with the inverse demand P = 260 2Q. Two firms compete choosing their quantities. Both firms have constant marginal and average cost MC = AC = 20. a. Find each firm's best response function.
What is the Nash equilibrium to this game?
Application of simple linear regression analysis to the estimation of demand equation has yielded the following: Q = 24 - 2P. If the current product price is P=$6 and the quantity sold per time period is Q=10, then what is the error (e) for the cu..
The price elasticity of demand for gasoline in the short run has been estimated to be -0.1. If a war in the Middle East causes the price of oil (from which gasoline is made) to increase, how will that affect total expenditures on gasoline in the s..
let E1 denote his expenditure at the end of this year and E2 denote his expenditure at the end of next year. At the end of this year he will receive $100,000 in income, and at the end of next year, he will receive $105,000 in income.
Projected government revenues from blood sucking income andconsumption taxes, not to mention pick-your-pocket duties andexcise tases is $243 billion for 2008-2009 fiscal yeat. What would make the 08-09 budget a surplus
(a) Calculate the opportunity cost of an increase in the number of hours spent studying in order to earn a 3.0 grade point average(GPA) rather than a 2.0 GPA. (b) Is the opportunity cost the same for a move from a 0.0 GPA to a 1.0 GPA as it is for ..
Computer Products Corp. sells peripheral equipment used by both private businesses and the government. Due to a recession, Computer Product's sales have declined by 100,000 units and it now has 200,000 units of excess capacity.
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