Consider the labor market in an imaginary coastal town called Nutsland. There is only one buyer in that market, namely Nutsland Farm that operates with a production function of Q= The supply of labor is given as L=w-2, where w is the wage. On the output side, Olive Farm takes the price P =20 TL/kg for its olive oil as given due to intense competition in that market. Find Olive Farm's profit-maximizing labor demand. What wage does it have to pay? What would be the wage in Nutsland if the market were competitive? Compare the welfare implications of a) versus b). Calculate the deadweight loss and show it on a graph.

Consider the labor market in an imaginary coastal town called Nutsland. There is only one buyer in that market, namely Nutsland Farm that operates with a production function of Q= The supply of labor is given as L=w-2, where w is the wage. On the output side, Olive Farm takes the price P =20 TL/kg for its olive oil as given due to intense competition in that market. Find Olive Farm's profit-maximizing labor demand. What wage does it have to pay? What would be the wage in Nutsland if the market were competitive? Compare the welfare implications of a) versus b). Calculate the deadweight loss and show it on a graph.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.7P

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Consider the labor market in an imaginary coastal town called Nutsland. There is only one buyer in that market, namely Nutsland Farm that operates with a production function of Q= L- The supply of labor is given as L=w-2, where w is the wage. On the output side, Olive Farm takes the price P =20 TL/kg for its olive oil as given due to intense competition in that market. a. Find Olive Farm's profit-maximizing labor demand. What wage does it have to pay? b. What would be the wage in Nutsland if the market were competitive? c. Compare the welfare implications of a) versus b). Calculate the deadweight loss and show it on a graph.
Assume the demand and total cost functions for soccer balls are given in the following form: Demand: P = 120 - 20 and Total Cost: TC = 10Q + Q4. where Q is quantity and Pis the price measured in dollars. a) How many soccer balls is produced in the competitive market? What will be the price in the competitive market? b) Calculate CS, PS and DWL in the competitive market. Show them on a qraph;
Consider a competitive market for red lentils with 10,000 identical farmers, a competitive market price of $5 and the following MC for each farmer: MC = $0.5+ $0.05Q Also consider the following market demand function: Q_D=1,100,000-40,000P a) Calculate the optimal level of production (in tonnes) for each farmer (show workings). b) Assuming 10,000 lentil farmers of equal size, determine the market supply function and the equilibrium market quantity (show workings). c) Consider that the government now imposes a 25% tax on producers, calculate the new market equilibrium price (two decimal places) and new market equilibrium output (two decimal places) (show workings). d) Calculate the value of the deadweight loss for the consumer and the producer following a 25% tax on red lentils, as well as, the amount of government revenue.
0.50.2 Given the production function q = f(x1, x2) = 1.32 × xx2, input price vector (w1, w2) and output price P, what are correct about the input demands x(w1, w2, p), x (w1, w2, p) ? Numerical results are rounded to the nearest 3-digit. Select one or more: Select one or more: O x (8, 5, 17) = 3.336 and x (8, 5, 17) = 2.202 O x(4, 7, 12) = 4.398 and x (4, 7, 12) = 0.833 O x (8, 5, 16) = 1.874 and x(8, 5, 16) = 1.199 O x (5, 7, 12) = 2.01 and x (5, 7, 12) = 0.982
The estimated supply function for avocados is Q = 58 + 15p − 20pf, where pf is the price of fertilizer. Determine how much the supply curve for avocados shifts if the price of fertilizer rises by $1.10 per lb. Illustrate this shift in a diagram.
How will each of the following affect the demand for resource A, which is being used to produce commodity Z? Where there is any uncertainty as to the outcome, specify the causes of that uncertainty. An increase in the demand for product Z.
Suppose that the extended demand function for men's haircuts in a city is as follows: Qd = 500 - 30p +0.08M, where p is the price of haircuts and M is the average monthly income in the city. Suppose that the extended supply function for haircuts is Qs = 100 + 20p -30w where p is the price of haircuts and w is the average hourly wage of barbers. Assume that M = $5000 and w = $10 What are the constant/intercept terms of the reduced equations for Qd and Qs. a. Qd=100; Qs=50 b. Qd=100; Qs= 100 c. Qd=900; Qs= -200 d. Qd=1000; Qs=500
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– A certain cleaning company cleans professional offices and believes its staff can clean up to 300 office units a week at a labor and supply cost of $58 per unit. Preliminary pricing surveys indicate that if that if the company charges $100 per unit, it will have clients for 300 units. For every $5 price increase it can expect a demand of 10 fewer units. Assume the demand, s, is a linear function of price p. Find an equation for demand as a function of price. Find the Revenue and Cost functions, both of which are dependent on price p. Write the Profit function. Using Desmos, graph the Revenue, Cost, and Profit functions on the same coordinate plane. Label the axes and the functions and use an appropriate scale. Find the break-even points graphically and confirm algebraically. Label the regions of profit and loss on the graph. Algebraically find the price that results in a maximum profit. Conclusion: A price of $_________ results in a quantity of _____________ units…
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A firm can produce output using three inputs and the following production technology: q = xxx. The firm is a price-taker in both the markets where it buys its inputs and the one where it sells its output. The price of output is equal to $12 and the prices of all the inputs are equal to $1. a) Find the firm's profit as a function of the input quantities. b) Find the profit-maximizing quantities of the inputs and the quantity of output that is produced. c) Verify that what you have found is the unique global maximum.