Question
Consider an economy with the following cobb douglas production Y=K^0.3 L^0.7 the economy has 1000 units of capital and a labor force of 1000 workers
Consider an economy with the following cobb douglas production
Y=K^0.3 L^0.7
the economy has 1000 units of capital and a labor force of 1000 workers
a. write down the equation describing labor demand in this economy as a function of the real wage and the capital stock
b. What is the real wage in a long run equilibrium?In this equilibrium what are employment output and the total amount earned by workers?
c. suppose that the parliament passes a law requiring firms to pay workers a real minimum wage of 1. How does this wage compare to the quilibriym wage? what are the effects of this law? Specifically what happens to employment output and the total amount earned by workers? Will the parliament succeed in its goal of helping the working class? Explain
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Introduction to Global Business Understanding the International Environment & Global Business Functi
Authors: Julian Gaspar, James Kolari, Richard Hise, Leonard Bierman, L. Smith, Antonio Arreola Risa
2nd edition
1305501187, 9780547152127, 547152124, 9781111824259, 1111824258, 978-1305501188
