Part 1: True/False/Explain. For each question, follow these steps. First, define or explain precisely any terms or concepts that are underlined, with a focus on the particular context in which they are being used. Second, state whether the statement is true or false, and explain why. Include diagrams or examples as part of your example, if appropriate. Concise answers are preferred over wordy ones. Lewis model. a. Draw the marginal value product of labor curve in the traditional sector (call this scenario A). Clearly label the curve and the axes of the graph. Include a dotted line for the subsistence level wage. b. Suppose a new labor-saving agricultural technology is introduced (call this scenario B). What would the MVPL curve look like now? Clearly label it on your graph. Describe in words why the graph has changed. c. Draw the graph for the modern sector, and draw one MVPL curve for the modern sector (e.g. assuming one fixed level of capital). d. Draw two labor supply (LS) curves on the new graph, clearly labeled, that correspond to scenarios A and B. Also clearly label the Lewis turning point for each scenario. Describe in words what the Lewis turning point is. e. f. Describe in words what has happened to the Lewis turning point, with the introduction of the labor-saving agricultural technology.

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APPLICATION Sketch a typical isoquant for a healthcare outcome, say “population mental health”. The inputs used to produce this output are “therapists” and “drugs”. Draw representative isocost lines and indicate the least-cost combination of inputs to achieve the output level represented by the isoquant. Illustrate what would happen if the price of therapists increased. Did the least-cost input combination change? In what way? That is, are you using more therapists after the price change or less? What happened to the use of drugs?

sitier the production model studied in Chapter 4. Final output in the economy is pro- duced using capital K and labor L. The production function is: Y = ĀK'/³L^/5 Assume that the supply of all inputs are exogenous and equal to L and K. Perfectly compet- itive firms are price-takers and choose how much capital and labor to demand by maximizing profits. Let w and r denote the wage and rental rate of one unit of labor and capital respec- tively. (a) What are the 5 endogenous variables in this model? Also list the exogenous variables and the parameters and provide a brief explanation of each. (b) Show the first order conditions for labor and capital. Explain the intuition for why these conditions are optimal for a firm. Are there diminishing returns to these inputs in this model? ( (c) Show that the solution for output per capita can be written as y = Ak/5. Observed GDP per capita is 3 in this economy. Capital per person is 32. If Ā = 1, what does this model predict for GDP per person?…

Consider the model of a firm that produces final goods using R&D and components as inputs, with cost dataas follows:Assembly: Total cost of production = PAQA = 400Earnings of High-Skilled Labor = WHHA = 100Earnings of Low-Skilled Labor = WLLA = 200Earnings of Capital = RKA = 100R&D: Total cost of production = PRQR = 400Earnings of High-Skilled Labor = WHHR = 175Earnings of Low-Skilled Labor = WLLR = 125Earnings of Capital = RKR = 100A) Which factor is assembly intensive? In which factor(s) is R&D intensive?B) Suppose that due to the opening of trade, the price of assembly falls by ∆PA/PA = −20%, the price of R&D remains unchanged, ∆PR/PR = 0%, and capital’s share earnings remains constant.C) What has happened to the relative wage of high-skilled/low-skilled labor? Does this match the predictions of the offshoring model?

Problem B: The Production Model Consider the production model that we have seen in class with a production function for final output specified as Y = K1/4L3/4 Capital and labor available in the economy are, respectively, K = 40 and L = 50. B.1 Write down the profits maximization problem for firms in the production model (you can write profits in units of final output). Derive the first order conditions for the firm's maximization problem and provide the economic interpretation of the first order condition for labor. B.2 Please define the property of "Constant Returns to Scale" as we did in class. Does the production function above exhibit constant returns to scale? Show your computations. B.3 State the equations that constitute the competitive general equilibrium for the economy in the production model above. What are the variables that you need to solve for to obtain a solution to the equilibrium?

Consider the model of a firm that produces final goods using R&D and components as inputs, with cost dataas follows:Assembly: Total cost of production = PAQA = 400Earnings of High-Skilled Labor = WHHA = 100Earnings of Low-Skilled Labor = WLLA = 200Earnings of Capital = RKA = 100R&D: Total cost of production = PRQR = 400Earnings of High-Skilled Labor = WHHR = 175Earnings of Low-Skilled Labor = WLLR = 125Earnings of Capital = RKR = 100A) In which factor(s) is assembly intensive? In which factor(s) is R&D intensive?B) Suppose that due to the opening of trade, the price of assembly falls by ∆PAPA= −20%, the price of R&Dremains unchanged, ∆PRPR= 0%, and capital’s share earnings remains constant.C) What has happened to the relative wage of high-skilled/low-skilled labor? Does this match the predictions of the offshoring model?

help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working