P2 A company competing in the market for itsproducts is one of buying labor in the market forinputs.The price for its products is p = 10, the output ofthe labor force is Q = 12L.The supply function of the labor force is LS = 8w- 32.We find a balance between labor input, wagesand the volume of sales of the company'sproducts.Draw the picture for the balance in this market(mark the axes and clearly state what each curvecorresponds to). T.a.m. What is the demand forhere in the company's profit maximization?Calculate the supply elasticity in equilibrium andshow with the calculation the relationshipbetween the supply elasticity and the levy thatthe company has in excess of the salary it pays.

A firm demand for any input is determined by the value of marginal product of that input and supply…

Answered: A company competing in the market for…

A company competing in the market for its products is one of buying labor in the market for inputs. The price for its products is p = 10, the output of the labor force is Q = 12L.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 5PA

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Question

A company competing in the market for its
products is one of buying labor in the market for
inputs.
The price for its products is p = 10, the output of
the labor force is Q = 12L.
The supply function of the labor force is LS = 8w
- 32.
We find a balance between labor input, wages
and the volume of sales of the company's
products.
Draw the picture for the balance in this market
(mark the axes and clearly state what each curve
corresponds to). T.a.m. What is the demand for
here in the company's profit maximization?
Calculate the supply elasticity in equilibrium and
show with the calculation the relationship
between the supply elasticity and the levy that
the company has in excess of the salary it pays.

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