Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Macroeconomics Expert

Exercise 1

Assuming that the utility is Cobb-Douglas (U (C,l) = Cαlβ). First formally prepare down the consumer’s problem. Then, answer the problems in the problem. No algebra is necessary to answer the problems, describe your answers using clearlylabeled graphs and intuition.

Suppose that a consumer can earn a higher wage rate for working overtime. That is, for the first q hours the consumer works, he or she receives a real wage rate of w1, and for hours worked more than q he or she receives w2, where w2 > w1. Suppose that the consumer pays no taxes and receives no nonwage income, and he or she is free to choose hours of work.

(a) Draw the consumer’s budget constraint and show his or her optimal choice of consumption and leisure.

(b) Show that the consumer would never work q hours or anything very close to q hours. describe the intuition behind this.

(c) Determine what happens if the overtime wage rate w2 increases. describe your results in term of income and substitution effects. You must consider the case of a worker who initially works overtime, and a worker who initially does not work overtime.

Exercise 2

Consider a competitive firm that has a production function given by Y = zF (K,N) where z > 0 and K > 0 are exogenous and faces wage w > 0.

(a) prepare down the problem of the firm.

(b) Now suppose that Y = N1/2. find out the demand function for labor of the firm. describe the intuition of the algebraic expression you found.

Exercise 3

Suppose a firm has a production function given by F (K,N) = Kα Nβ .

(a) What are the restrictions on α and β implied by the assumption that the marginal product of capital and labor are positive?

(b) What are the restrictions on α and β implied by the assumption of constant returns to scale?

(c) Prove that the restrictions obtained in parts (a) and (b) imply that the marginal product of labor decreases as the quantity of labor increases.

Exercise 4

Consider a simple one-period, closed-economy model where the representative consumer has utility function U(C,l) = C1/2l1/2 and has h available hours to divide between work and leisure. The representative firm has technology given by Y = zK1/3N2/3. There is a government that sets its expenditure level at a value G.

(a) Define a competitive equilibrium for this economy.

(b) Prove that Walras’ Law applies.

(c) Find the competitive equilibrium values ( ^C, ^Ns, ^N d, ^ T, ^ w) given parameters h = 20, z = 1, K = 1000, and G = 0.

Exercise 5

Consider the same economy described in Exercise 4.

(a) Set up the equivalent social planner’s problem with the choice variables being (C,N).

(b) Using the parameters in Exercise 4, part (c), solve for the Pareto optimal consumption and employment levels, (C*,N* ).

(c) Formally state the FirstWelfare theorem relating your solution to part (b) and the competitive equilibrium allocation found in Exercise 4, part (c).

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M91706
  • Price:- $70

Guranteed 36 Hours Delivery, In Price:- $70

Have any Question? 


Related Questions in Macroeconomics

Economics required research reportevaluation of demand

Economics Required Research Report Evaluation of Demand Elasticity Business reports should be typed, double spaced, standard margins, and all sources fully cited. Please attach any referenced newspaper and or magazine ar ...

Please help with this assignment read the articles and

Please help with this assignment. Read the articles and discuss the problems of Economic Inequality in the US Economy, summarize key points from the articles. 1. Making a Mockery of the American Dream http://www.usnews.c ...

Although there are many different examples of economies in

Although there are many different examples of economies in the world, all of them demonstrate one or more of the four basic types of market structure. For this assignment, in your own words, Identify the four basic marke ...

Would need in an hoursuppose the marginal social cost of

Would need in an hour. Suppose the marginal social cost of providing health care to a person is given by the equation 20+4Q. An individual's marginal benefit of health care is 300-Q. This individual has an insurance poli ...

Course learning objective outline the flow of goods and

Course Learning Objective: Outline the flow of goods and resources to and from economic decision makers. One way to understand how the economy works is the circular flow model. This model demonstrates the flow of resourc ...

Describe the nature of educational dualism in developing

Describe the nature of educational dualism in developing countries and its implications for the character of growth.  Also, elaborate on how the LDC educational system actually contributes to the reproduction of social i ...

Sam runs a shoeshine stand at the airport sam has no skills

Sam runs a shoeshine stand at the airport. Sam has no skills, no job experience, and no alternative employment.Entrepreneurs in the shoeshine stand business earn $12,000 a year. Sam pays the rent of $1,500 a year, and hi ...

Establishing a proprietary standard as the industry

Establishing a proprietary standard as the industry standard may require a company to win a format war against a competing and incompatible standard. Strategies for doing this include producing complementary products, le ...

Pick a product or service you use in your everyday life and

Pick a product or service you use in your everyday life and describe the market for this product.  For this paper we will use the UBER driving service.  Please make sure to address the following questions: 1. What factor ...

Economicsintroduction250wordsprovide an overview of the

Economics Introduction(250)words Provide an overview of the chosen economy of a country Production output performance analysis(500)words -real gdp , real gdp growth rate, real gdp per capita -define and explain how each ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro