Consider the O-Ring model with LaTeX: N=2 tasks. Workers in-country LaTeX: R each have a skill, LaTeX: q_R, that is 3 times the skill of each worker in country LaTeX: P . Therefore output in country LaTeX: R is ______ times the output in country LaTeX: P .
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- doubt EXERCISE 11.6 Suppose capital and labour are perfect complements in a one- to-one ratio. That is, suppose that Q = min (L, K). Currently, the wage is w=5 and the rental rate is r = 10. What is the minimum cost and method of produc ing Q = 20 units of output? Suppose the wage rises to w' = 20. If we keep total cost the same, what level of output can now be produced and what method of production (input mix) is used? PVERA firm has two opportunities for a new plant location, one is in China and the other is inMexico. The firm's production function is given by q = L 0.5 K 0.5 , In China, the cost of laboris w=$15 and the cost of capital is r=$5. In Mexico, w=$10 and r=$10. The firm wants toproduce 100 units of output. Which location should the firm choose for their new plant?Explain why.Note: Please round the optimal amounts of capital and labor at each location to the nearest whole number when making your calculations.Hint: cost-minimization rule.Consider the following model of the economy Production function: Y = AKN – N2/2Marginal product of labor: MPN = AK – N. Where the initial values of A = 8 and K = 10. The initial labor supply curve is given as: NS = 20 + 9w. Cd = 401 + .50(Y-T) – 500rId = 800 – 500rG = 500T= 100 Md/P = 469 + 0.5Y- 1000r Nominal Money supply M = 4000 We assume that expectedinflation is zero (?e?= 0) so that money demand depends directly onthe real interest rate (since i = r). 1 a) Solve for the labor market clearing real wage (w*), theprofit maximizing level of labor input (N*), and the full employment level ofoutput (Y*). Please show your work. Draw two diagrams verticallywith the labor market on the bottom graph and the production function on thetop graph. Be sure to label everything including this initial equilibrium pointas point A b) Derive an expression for the IS curve (r in terms of Y). Please show all work c) Find the real interest rate that clears the goods market. Please show all work…
- All supply and demand quantities in an assignment model are transshipment units. O True O Falsea two sector economy has the following input-output technical matrix 0.4 0.3 0.6 0.5 the final demand for the next year is estimamted as 60million for sector Rand 90million for sector s.determine i) total production from each sector in oder to satisfy both intermediate and finanal demand total worth of primamry inputs for the production level in( i)What is the value of the bordered Hessian determinant of the generalized Cobb-Douglas production function q=K0,3L0,5 subject to 2K+L=120?
- If q=9L²-L³ marginal product of labor is_________when L=2.Suppose the marginal revenue from search isMR = 50 - 1.5wwhere w is the wage offer at hand. The marginal cost of search isMC = 5 + wa. Why is the marginal revenue from search a negative function of the wage offer at hand?b. Can you give an economic interpretation of the intercept in the marginal cost equation; in other words, what does it mean to say that the intercept equals $5? Similarly, what does it mean to say that the slope in the marginal cost equation equals one dollar?c. What is the worker’s asking wage? Will a worker accept a job offer of $15?d. Suppose UI benefits are reduced, causing the marginal cost of search to increase to MC = 20 + w. What is the new asking wage? Will the worker accept a job offer of $15?Consider the (long run') effects of inward labor migration in the Heckscher- Ohlin Model. Assume that the country trades and the relative price of two goods X and Y stavs constant. Assume X is relatively labor intensive. Intuitively explain how the increase in labor supply affects (relative) output of X and Y and how it affects factor prices ('Rybczynski Theorem'). You may want to use graphs.
- Wages are the major element of cost in the economy accounting for about 70 percent of all input costs. True or FalseWhat are some implications of institutional void to MNCs?Consider the following production function: x = f0.K) = A e°k where xis the output e is the labour input, kis the capital input, and A, bare positive constants. (a) Set up the cost minimization problem and solve for the first order conditions using the Lagrange Method. Let wbe the wage rate and rthe rental rate of capital. (b) Using your answer in (a), find how much labour and capital would the firm use to produce x outputs, given wage rate wand rental rate of capital ? what are these functions called? (e) Using your answer in (b), find the minimum cost it takes to produce xoutputs, What is this function called?
