Ask Question, Ask an Expert


Ask Microeconomics Expert

problem1. Agree or Disagree. describe your position with one or two sentences. Use a diagram if necessary.

(a): In the short-run, a firm facing competitive input and output markets should shut down if the market wage is greater than the MRPN. Assume that labour is the only variable input.

(b): A firm’s response to a wage change will be greater in the long-run than in the short-run.

(c): Inelastic demand curves are steeper than elastic ones.

(d): Scale and substitution effects always go in the opposite direction.

(e): When a firm’s output market is very price-elastic, derived demand for labour will be very price-inelastic.

(f): Labour’s share in the total costs of a ?rm has no impact on the elasticity of demand.

(g): Canada will not gain from trade because Canada is already on its PPF.

problem2. Suppose there are a large number of identical Canadian firms producing hockey pucks according to the production function: Q = 3. L 2/3 where Q is the number of pucks produced and L is the number of hours of labour.
Therefore, the marginal product of labour is given by

MPN = 2. 1/L1/3 

The price of hockey pucks is p.

(a) Solve for the demand function assuming p = 10

(b) find out the labour demand, output, and profits for wages equal to the following (fill in table) and still assuming p = 10. How do profits vary along the demand curve?1

Table 1: Table for problem 2, part b

Wage ($) Labour   Output   profits

(c) Suppose the wage of Canadian puck workers is w = 5. But now a Swedish firm can make pucks for less by having consumers assemble them at home. The Swedish firm competes with the Canadian firms in a world market for pucks. Suppose that now the world price falls from p0 = 10 to p1 = 8. If nothing else changes, what happens to the amount of labour Canadian firms wish to use?

(d) Don Cherry, still bitter about Swedish gold at the 2006 Olympic Games, does not want to be outdone by the Swedes again. He lobbies the Canadian government to subsidize the research and development of puck manufacturing. The production process is now:

Q = 6   L2/3

And the marginal product of labour is

MPN = 4.  1/L11/3

Ignore the shutdown decision. Show that, at any given p, Canadian firms producing with (3) instead of (1) will now demand more labour when w = 5.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91233

Have any Question? 

Related Questions in Microeconomics

Create the demand and supply of the labor market and demand

Create the demand and supply of the labor market and demand and supply of the goods market using the production function and consumption utility function given. Solving the equations and graphing the models have to be th ...

Feeding america final milestonein this assignment you will

Feeding America Final milestone In this assignment, you will demonstrate your mastery of the following course outcomes: - Evaluate management strategies and organizational structures of not-for-profit organizations for t ...

Question 1which of the following has not been identified as

Question 1 Which of the following has NOT been identified as a basic consumer right? Consumers have a right to safe products. Consumers have a right to collude. Consumers have a right to be informed about a product. Cons ...

Task list principles of microeconomicsyou are starting

Task List: : Principles of Microeconomics You are starting your own Internet business. You decide to form a company that will sell cookbooks online. is scheduled to launch 6 months from today. You estim ...

Assignmentyou will submit your second comprehensive summary

Assignment You will submit your second comprehensive summary (4-5 pages) regarding your final progress report. If you are still in your original business, what lessons did you learn? If not, what went wrong? What improve ...

Assignmentthere is the widespread notion that economists

Assignment There is the widespread notion that economists rarely agree with each other. This seems perplexing when we note also that economics is often called the "Queen of the Social Sciences" (meaning that it is the mo ...

Assignmentoverviewthe incidence of fraud in the news has

Assignment Overview The incidence of fraud in the news has become more common in recent years. As the accounting profession becomes more aware of fraud schemes, it seems that the criminals who perpetrate them have become ...

Assignmentwrite a 5-6 page paper on one of the following

Assignment Write a 5-6 page paper on ONE of the following topics. Advice: Read the question you choose very carefully, and make sure you are answering it. What you write must be clearly relevant to answering the question ...

Assignmenta computerworld investigation reported that

Assignment A Computerworld investigation reported that delays in overhauling the federal tax system have cost the U.S. government approximately $50 billion a year in uncollected taxes. Although the IRS has spent hundreds ...

Assignment economics read the following case study and

ASSIGNMENT: ECONOMICS Read the following case study and answer the given question. THE MACROECONOMICS OF POVERTY REDUCTION: THE CASE STUDY OF BANGLADESH Adapted: Osmani, S.R; Mahmud, W; Sen, B; Dagdeviren, H; and Seth, A ...

  • 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

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

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen