A domestic economy can produce wine or bread using labor with the following technology: Ye = 21 y = 0.51 Preferences in this economy are Cobb-Douglas and given by: u (Cu, Ch) = 0.2 log cu +0.8 log cs Total labor endowment in this economy is 1 million workers that are perfectly mobile across sectors. A foreign economy is instead characterized with the following technology: Y = 31 The foreign economy has the same preferences as the domestic, but a labor supply of 10 million workers. What is the equilibrium competitive wage rate in units of bread for the home economy under free-trade? O 3/2 2/3 1/2 O00O
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- A visiting American executive finds that a foreign subsidiary inBangladesh has hired a 12-year-old girl to work on a factoryfloor, in violation of the company's prohibition on child labour.He tells the local manager to replace the child and tell her to goback to school. The local manager tells the American executivethat the child is an orphan with no other means of support, andshe will probably become a street child if she is denied work. explain Cultural Relativist based on the statement givenThere are 2 countries, D and F. There are 2 products X and Y. Each country has only a single input labor hours, Li, j, where i is D for Domestic or F for Foreign and j is either X for Good X use of the labor or Y for Good Y use of labor. In country D: XD = aD*LD, X YD = bD*LD, Y LD = LD, X + LD, Y In country F: XF = aF*LF, X YF = bF*LF, Y LF = LF, X + LF, Y At the moment: aD = 0.25, bD = 0.5, LD = 32, aF = 0.8, bF = 0.4, LF = 40. Each country is operating in autarky and has determined to divide its labor force equal between the production of X and Y Now the two countries open to trade. The Terms of Trade are set 1 unit of X for 1.5 units of Y. The countries exchange exactly 4 units of X. The countries partially specialize in their areas of comparative advantage. How much labor must it move from producing Y to producing X to increase its production of X by 4 units? ∆L = In the country that specializes in producing Y, how much additional Y must it produce? ∆Y =…Suppose that firms in the zipper industry have the production technology: F(K,L)=4K^(3/4) * L^(1/4)You know that the cost of labor is 27 and the price of zippers is 8. If the market is in a long-runequilibrium and zippers are being produced, what is the price of capital?
- Consider a world composed of two countries, Home (H) and Foreign (F). Individuals living in each countryi H, F have preferences over two goods x and y.In each country there is only one factor of production, labour, which is perfectly mobile between industries butimmobile between countries. The total labour endowment at Home is LH = 10 and the total labour endowmentin Foreign is LF = 10.The marginal product of labour in each industry is constant. At Home, one worker can produce 2 units ofgood x or 1 unit of good y per unit of time; at Foreign one worker can produce 1 unit of good x or 2 units of goody per unit of time.Assume that consumers in Home and Foreign always consume goods x and y in the same quantity regardlessof their prices. That is, Cxi = Cyi, i = H, F D. Determine the optimal consumption and production at Home and Foreign under autarky. Depict this situation in a graph that includes each country’s PPF and indifference curves for the representative consumer.Consider a world composed of two countries, Home (H) and Foreign (F). Individuals living in each countryi H, F have preferences over two goods x and y.In each country there is only one factor of production, labour, which is perfectly mobile between industries butimmobile between countries. The total labour endowment at Home is LH = 10 and the total labour endowmentin Foreign is LF = 10.The marginal product of labour in each industry is constant. At Home, one worker can produce 2 units ofgood x or 1 unit of good y per unit of time; at Foreign one worker can produce 1 unit of good x or 2 units of goody per unit of time.Assume that consumers in Home and Foreign always consume goods x and y in the same quantity regardlessof their prices. That is, Cxi = Cyi, i = H, F A. Calculate the opportunity cost of producing one additional unit of good x in terms of units of good y in Homeand Foreign. B. Derive the production possibilities frontier (PPF) for Home and Foreign and plot it in a…Consider a world composed of two countries, Home (H) and Foreign (F). Individuals living in each countryi H, F have preferences over two goods x and y.In each country there is only one factor of production, labour, which is perfectly mobile between industries butimmobile between countries. The total labour endowment at Home is LH = 10 and the total labour endowmentin Foreign is LF = 10.The marginal product of labour in each industry is constant. At Home, one worker can produce 2 units ofgood x or 1 unit of good y per unit of time; at Foreign one worker can produce 1 unit of good x or 2 units of goody per unit of time.Assume that consumers in Home and Foreign always consume goods x and y in the same quantity regardlessof their prices. That is, Cxi = Cyi, i = H, F C. Determine the equilibrium price of good x (setting the price of good y as 1) that prevails at Home and Foreig under autarky – that is, when they do not trade with each other. Explain why any other price could not be the…
- Consider the following production diagram: 12 10 A Capital 6 2 0 0 1 Labor 4 For each of the five labeled points (A, B, C, D, and E), determine whether the correct levels of labor and capital are being used. If the correct level is not being used, explain why, and what change should be made. Hint: Start by identifying the optimal point. Being able to compare to the optimal point will assist you in determining the changes that need to be made.Suppose that a car dealership wishes to see if efficiency wages will help improve its salespeople’s productivity. Currently, each salesperson sells an average of one car per day while being paid $20 per hour for an eight-hour day.a. Suppose that if the wage is raised a second time to $40 per hour, the number of cars sold rises to an average of 2.5 per day. What is now the labor cost per car sold? $______ per vehicleb. If the firm’s goal is to maximize the efficiency of its labor expenditures, which of the three hourly salary rates should it use: $20 per hour, $30 per hour, or $40 per hour? $______ per hourc. By contrast, which salary maximizes the productivity of the car dealer’s workers (cars sold per worker per day)? $_______ per hour15. PLEASE ONLY C A firm can use three different production technologies, withcapital and labor requirements at each level of output as follows:TECHNOLOGY 1 TECHNOLOGY 2 TECHNOLOGY 3DailyOutputK L K L K L100 3 7 4 5 5 4150 3 10 4 7 5 5200 4 11 5 8 6 6250 5 13 6 10 7 8a. Suppose the firm is operating in a high-wage country, wherecapital cost is $100 per unit per day and labor cost is $80 perworker per day. For each level of output, which technologyis cheapest?b. Now suppose the firm is operating in a low-wage country,where capital cost is $100 per unit per day but labor cost isonly $40 per unit per day. For each level of output, whichtechnology is cheapest?c. Suppose the firm moves from a high-wage to a low-wagecountry but its level of output remains constant at 200 unitsper day. How will its total employment change?
- A firm can use three different production technologies, with capital and labour requirements at each level of output as follows: Technology 1 Technology 2 Technology 3 Daily Output K L K L K L 100 3 7 4 5 5 4 150 3 10 4 7 5 5 200 4 11 5 8 6 6 250 5 13 6 10 7 8 a. Suppose the firm is operating in a high-wage country, where capital cost is $100 per unit per day and labour cost is $80 per worker per day. For each level of output, which technology is the cheapest? Now suppose the firm is operating in a low-wage country, where capital cost is $100 per unit per day but labour cost is only $40 per unit per day. For each level of output, which technology is the cheapest? Suppose the firm moves from a high-wage to a low-wage country but its level of output remains constant at 200 units per day. How will its total employment change?Historians have been able to find out how the relationship between wage levels and capital costs developed in England and France from the early 1600s until the first part of the 1800s. What does not characterize this development? Wage levels relative to capital costs fell in the early 1600s in France and never rebounded to the same level in the period up to 1820 O After about 1700, England experienced a long period of steadily higher wages relative to capital costs. O Since the two countries are so close to each other, the development is exactly the same in the two countries. Compared to France, labour in England was much more expensive relative to capital at the start of the Industrial Revolution.Suppose that a car dealership wishes to see if efficiency wages will help improve its salespeople's productivity. Currently, each salesperson sells an average of 1 car per day while being paid $24 per hour for an 8-hour day. Instructions: Enter your answers as a whole number. a. What is the current labor cost per car sold? $ b. Suppose that when the dealer raises the price of labor to $34 per hour, the average number of cars sold by a salesperson increases to 2 per day. What is now the labor cost per car sold? 2$ By how much is it higher or lower than it was before? |(Click to select) ♥|by $ Has the efficiency of labor expenditures by the firm (cars sold per dollar of wages paid to salespeople) increased or decreased? (Click to select) V c. Suppose that if the wage is raised a second time to $46 per hour, the number of cars sold rises to an average of 2.5 per day. What is now the labor cost per car sold? $ d. If the firm's goal is to maximize the efficiency of its labor expenditures,…
