Business, 13.03.2020 00:54 smileyjesse6073

Consider twocompetitive economies that have the same quantities of labor (L= 400) and capital (K= 400), and the same technology (A= 100). The economies of the countries are described by the following Cobb-Douglas production functions:North Economy:Y= A L0.3K0.7South Economy:Y= A L0.7K0.3a. Which economy has the larger total production? Explain. b.In which economy is the marginal product of labor larger? Explain. c.In which economy is the real wage larger? Explain. d.In which economy is labor's share of income larger? Expla

Answers: 2

Show answers

Answers

A) Both economies have the same total production. Because the amount of capital and labour is the same, and the total production is calculated by replacing K=400 , L=400 and A=100 in the corresponding equations for each country, both countries will produce $Y=100\times(400)^{0.3}\times(400)^{0.7}=40,000$ . B)The south economy will have the larger marginal product of labor. This is because in this economy, the relative weight of labor in the production function is larger (0.7 in the south against 0.3 in the north economy). If you calculate the marginal derivative of product in terms of labour (wich mathematically express the concept of marginal product) in the south Y_L^S

you will get $Y_L^S=0.7(\frac{K}{L} )^{0.3}=0.7(\frac{400}{400})^{0.3}=0.7$ while in the north, the marginal product of labor Y^N_L

will be $Y^{N}_L=0.3(\frac{K}{L} )^{0.7}=0.3(\frac{400}{400})^{0.7}=0.3$ . C) The real wage is expected to be larger in the economy where the productivity of labor (or marginal product of labor) is larger, which is the south economy. This is because in equilibria conditions, each factor of production's payment equals its marginal production. Then, if the marginal production of labor is greater in the south, it is expected that its payment (which would be equal to marginal production) is greater than in the countries with lower marginal production.D) Total production or income (Y) would be used to pay factors of production's services. This can be expressed with the following equation: $Y=w\times{L}+r\times{K}$ which means that product should be enough to pay the market price of the units of labor and capital used in the process. The market price is the wage ("w") and the return rate of capital ("r"). As mentioned before, in equilibria, factors are paid at their productivity rate (or marginal product), which in this case means that wage would be paid at w_S=0.7

in the south and at w_N=0.3

in the north. Then, from total production (which was calculated in point 1), labor would have a larger share on income in the south $s_L^S=\frac{L\times{w}}{Y} =100\times\frac{400\times0.7}{40,000} =0.7$ , because the marginal product of labor (hence its payment) is greater there, while in the north this share on income for labor would be $s_L^N=\frac{L\times{w}}{Y} =100\times\frac{400\times0.3}{40,000} =0.3$ .

Answer from: Quest

client registration system, resource management system, clinical management system, patient information database, common use-system interface

explanation:

Answer from: Quest

lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o

Another question on Business

Business, 22.06.2019 05:00

Xie company identified the following activities, costs, and activity drivers for 2017. the company manufactures two types of go-karts: deluxe and basic. activity expected costs expected activity handling materials $ 625,000 100,000 parts inspecting product 900,000 1,500 batches processing purchase orders 105,000 700 orders paying suppliers 175,000 500 invoices insuring the factory 300,000 40,000 square feet designing packaging 75,000 2 models required: 1. compute a single plantwide overhead rate, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours. 2. in january 2017, the deluxe model required 2,500 direct labor hours and the basic model required 6,000 direct labor hours. assign overhead costs to each model using the single plantwide overhead rate.

Answers: 3

Answer

Business, 22.06.2019 20:20

This activity is important because as a marketing manager, you must allocate resources to reach your target market. during the strategic marketing process, managers move through three important phases to determine how to optimally allocate resources: a planning phase, an implementation phase, and an evaluation phase. in this interactive exercise, you are asked to review various strategic marketing actions and determine where in the strategic marketing process the action would occur. the goal of this exercise is to demonstrate your understanding of the strategic marketing process and related marketing actions.

Answers: 2

Answer

Business, 22.06.2019 20:30

Afirm wants to strengthen its financial position. which of the following actions would increase its current ratio? a. reduce the company's days' sales outstanding to the industry average and use the resulting cash savings to purchase plant and equipment.b. use cash to repurchase some of the company's own stock.c. borrow using short-term debt and use the proceeds to repay debt that has a maturity of more than one year.d. issue new stock, then use some of the proceeds to purchase additional inventory and hold the remainder as cash.e. use cash to increase inventory holdings.

Answers: 3

Answer

Business, 23.06.2019 00:50

On december 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: accounts receivable, debit balance of $97,900; allowance for doubtful accounts, credit balance of $1,031. what amount should be debited to bad debts expense, assuming 6% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible?

Answers: 1

Answer

You know the right answer?

Consider twocompetitive economies that have the same quantities of labor (L= 400) and capital (K= 40...

Questions