1. Robinson Crusoe lives on a desert island on the equator. He has 12 hrs of daylight every day to allocate between leisure and work. The table shows seven different alternative combinations of leisure and real GDP in Crusoe's economy:
|
Possibility
|
Leisure (hrs per day)
|
Real GDP ($ per day)
|
|
A
|
12
|
0
|
|
B
|
10
|
10
|
|
C
|
8
|
18
|
|
D
|
6
|
24
|
|
E
|
4
|
28
|
|
F
|
2
|
30
|
|
G
|
0
|
30
|
a. Make a table and graph of Crusoe's production function.
b. Find the Marginal product of labor for Crusoe at different quantities of labor.
2. Use the information about Robinson's Crusoe's economy in problem 1 and the fact that at a real wage rate of $4.50 an hour, Crusoe is willing to work any number of hours between 0 and 12.
a. Make a table that shows Crusoe's demand for labor schedule and draw Crusoe's demand labor curve.
b. Make a table that shows Crusoe's supply of labor schedule and draw Crusoe's supply of labor curve.
c. What are the equilibrium real wage rate and quantity of labor in Crusoe's economy?