Consider two sectors in an economy. One sector produces exports and the other is the import-competing sector. Both these sectors use capital and labor for production. Assume that the import competing sector is relatively labor intensive. Show graphically as well as mathematically the effect of an increase in the price of the import-competing good on equilibrium factor prices.
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Consider two sectors in an economy. One sector produces exports and the other is the import-competing sector. Both these sectors use capital and labor for production. Assume that the import competing sector is relatively labor intensive. Show graphically as well as mathematically the effect of an increase in the price of the import-competing good on
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- Home has 12,000 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 100, while in banana production is 75. There is now also another country, Foreign, with a labor force of 18,000. Foreign’s unit labor requirement in apple production is 120, while in banana production is 150. Graph the relative demand curve along with the relative supply curve of banana. (Q_A^D)/(Q_B^D )=1/2*p_b/p_a ↔1/( (Q_B^D)/(Q_A^D ))=1/2*p_b/p_a Assume: Demand for apples/ demand for bananas =half of price of bananas/ price of apples What is the equilibrium relative price of banana?Consider a tropical island economy with only two sectors: souvenir manufacturing and hospitality (hotels). Both sectors are perfectly competitive, and workers are equally able and willing to work in either industry. Only foreign tourists demand souvenirs and hotel stays, so changes in the domestic labor market do not affect the product demand curve in either sector. Suppose a union forms in the souvenir manufacturing industry. The union limits its membership to less than the number of workers employed before the union formed and forces all employers in the industry to hire only union workers. Show the effect of unionization in the souvenir industry on the labor market for souvenir manufacturers. Tool tip: Click and drag one or both of the curves. Curves will snap into position, so if you try to move the curve and it snaps back to its original position, just try again and drag it a little farther. WAGE RATE (Dollars per hour] 12+ 10 8 6 2 0 10 20 30 Labor Supply Labor Demand 40 50 60…Assuming hypothetical equilibrium in Demand/Supply Model of Apples, illustrate impact of following events:Suppose the Doctors recommend eating Apples every morning. The Monsoon rains adversely affect the Apple Harvest. The government announces increase in Wages of workers. The price of petrol in the market comes down. Consumers Income falls during government imposed Lockdowns due to health concerns. Given below is the Supply Schedule of Nestle Milk per liter:Price of Milk per liter (in Rs) 100 200 300 400Quantity Supplied per day in liters (in 1000s) 100 200 300 400Use the above data to illustrate the Supply Curve in a graph with complete labels. Assume Rs. 200 is the original price of milk per liter and 200,000 liters is the original quantity of supply. Suppose the price rises from Rs. 200 to Rs. 300, what will be the amount of Quantity Supplied?Illustrate the impact of (C) on the graph. Is this a movement along the supply curve or shift of the curve?
- THIS IS FOR MATHEMATICAL ECONOMIC CLASS Question (2): The market for disposable cell phones: Q = 2300 – 16p and Q = 1850 + 14p. Find the equilibrium price and quantity. Suppose that a new technology has emerged that will enable firms to mass produce the cell phones at a reduced cost. Which curve will be affected and what will be the general outcome? Going back to question (b), if the new equilibrium price of a disposable cell phone is $11.25, how many disposable cell phones will be demanded by consumers? Derive the new function based on your analysis.Consider the labor market for the fast-food industry, which consists mainly of high school and college students. Assume that all fast-food restaurants are profit maximizing. The following calculator shows the market demand curve (blue curve) and market supply curve (orange curve) for student workers, who are responsible for making tacos. At any time in this problem, you can click the Reset to Initial Values button to return the elements in the calculator to their original positions. You will not be graded on any changes to the calculator; it's just here to help you answer the following questions. Tool tip: You can directly change the values in the boxes with the white background by clicking in the box and typing. The graph and any related values will change accordingly. WAGE RATE IX 0 10 20 30 40 50 60 70 80 90 100 QUANTITY OF LABOR (Thousands of workers) 14 Graph Input Tool LABOR MARKET CALCULATOR Wage rate Labor demanded (Thousands of workers) Price of a taco (Dollars) When the price…Suppose Hong Kong produces both golf balls and almonds with two factors of production: labor and capital. While the production of golf balls is relatively labor intensive, the production of almonds is relatively capital intensive. Answer the following questions with the Heckscher-Ohlin Model. (a)Draw the relative factor demand curves for both sectors without factor substitution and briefly explain. (b) Suppose that factor substitution is allowed. Explain with a diagram the impact of a decrease in the relative price of golf balls to almonds on the income of workers relative to that of capital owners, the ratios of labor to capital used in both industries, and the real incomes of workers and capital owners.
- In the labor market, workers would like to receive higher wages and firms would like to pay lower wages. Suppose that workers succeed in having a minimum wage established above the equilibrium wage. What will happen to the number of workers employed when compared to the original equilibrium? Explain Suppose that firms succeed in having a maximum wage establish below the equilibrium wage. What will happen to the number of workers employed compared to the original equilibrium? Explain. What wage maximizes the number of workers employed?Why? How can a price ceiling make consumers better off? Under what conditions might it make them worse off? Monopolistic competition combines the strengthen of both perfect competition and monopoly;it is the most ideal market structures of all three? Do you agree? Explain how diminishing returns and economies of scale affect production costs.Large scale organizational are definitely more efficient than small firms and hence there should be…Consider a two-sector general equilibrium of production system. Sector one’s unit cost function is c1 = w1/3r2/3 and that of sector two is c2 = w1/2r1/2, where w and r are the wage rate of labor and the rental rate of capital, respectively. Both the input and output markets are all characterized by perfect competition and full employment of both the factors of production. For a one-percent increase in the price of the commodity produced in sector two, what are the percentage changes in factor prices?Consider an INCREASE in the wage (as demanded by the labor groups) to a higher level than the equilibrium price for labor. SHOW geometrically what will happen in the labor market. What problem(s) is/are likely to arise in the labor market?
- Botswana and South Africa both produce laptops. Botswana produces the Lenovo brand whereas South Africa produces the Acer brand. The demand and supply structure in both countries are given by the Dixit-Stiglitz model, with an elasticity of substitution equal to two in both countries. Assume that the laptop market in Botswana is much large than in South Africa. In both countries, the marginal labour input requirement is one and the fixed labour input per variety is 2.5. Botswana's labour employment in the cell phone industry is 20 million people whereas that of South Africa is 10 million people. Determine the number of varieties that will be supplied to Botswana and South Africa laptop markets in Autarky.choose one in the brackets to fill in for the following question: If the wage rate for workers in car manufacturing rises, the (supply curve , quantity supplied ) for cars will [ increase, decrease, remain unchanged ) and the [ demand curve, quantity demanded) for cars will [ increase, remain unchanged, decrease) Consider a competitive market in equilibrium at (Q1,P1). When there is an increase in demand in this market, what exactly happens in this market? Help describe what happens by selecting the correct sequence of events from the drop-down menus below. [Advice: draw this situation in a competitive market diagram.] step 1:( creates an access demand at the original market price, this allows the market to clear at the original market price , this creates an excess supply at the original market price ) step 2: (this puts upward pressure on the price, this puts downward pressure on the price , this does not affect the price in this market ) step 3: ( there is an increase in supply, as…Consider a competitive market with a perfectly elastic supply curve and a perfectly inelastic demand curve. Suppose the price of an input that is required for the production of the good that is traded in this market increases. Suppose further that a positive quantity of the good is traded in equilibrium after the increase of the input price. One of the following statements is true. Which statement is true? The equilibrium quantity of the good traded in the competitive market after the increase of the input price is strictly higher than before the increase of the input price. A The equilibrium quantity of the good traded in the competitive market is the same before and after the increase of the input price. The equilibrium quantity of the good traded in the competitive market after the increase of the input price is strictly lower than before the increase of the input price. C