Explain the attached question below
Problem 15 Labour Demand with Perfect Competition in the Labour Market and Perfect Competition in the Output Market in Short Run. You are the manager of a business that operates in perfectly competitive markets (both the Labour Market and Output Market). The production function of the business is given by: Q -40LU . The price of the product is 100. The wage rate is 20. a. Calculate the level of output and amount of labour hired by the firm. b. Derive the demand for labour (Hint: solve for L in terms of w). c. Calculate the elasticity of Labour Demand and interpret the result in WORDS. d. Make diagrams for your solutions.In the questions 16-18 use these values in the multivariate demand function for Grapple tablets: PR = $500 Ph= $600 Pr = $600 Pav = $50 Pac = $100 Pmm = $30 Ag = 40 A = $100,000 C =2 Y=$30,000 16. After the values above are entered into your demand function, what quantity of Grapple tablets will be demanded? Be very careful with this calculation. This value will be used again below. 17. What is the point cross-price elasticity of Grapple tablets at the above price of Hewpaq laptops (P)? Show the values you use in the formula and work out completely. Be sure to show the sign. Does this value indicate a very sensitive (elastic; responsive) relationship (write a one sentence comment)? The formula is: E = OP Q , 18. What is the point age elasticity of Grapple tablets at the above age level (A.)? Show the values you use in the formula and work out completely. Be sure to show the sign. Does this value indicate a very sensitive (elastic; responsive) relationship (write a one sentence comment)? The formula is: Q, Ag E = DA Q ,Use the information above to get expressions for the consumption function and the AE equation. The vertical intercept for the consumption function is . 9. The slope of the consumption function is . 10. The vertical intercept of the AE equation is . 11. The slope of the AE equation is . 12. Equilibrium output is equal to . 13. Equilibrium consumption is equal to . 14. Suppose the investment demand function changes and is now |=700 - 50(r). The new value of equilibrium output is . 15. The new value of equilibrium consumption is . 16.Recall that the consumption function is C = 800 +.75(Y - T) - 30 (r). The Keynesian spending multiplier in this economy is .A firm's existing assets either have a high value of $345 million (the undervalued firm) or a low value of $135 million (the overvalued firm). The firm's manager knows the value of her firm's assets, but the market does not. The market assesses that there is a 50% chance the firm has high value assets and a 50% chance the firm has low value assets. Regardless of the value of the firm's current assets, the manager and the market are both aware that the firm has the opportunity to invest $30 million in a new project that will generate a cash flow with a present value of $60 million. The firm currently has 900,000 shares outstanding. The firm does not have the internal cash to fund the project, and thus if they want to fund the project they must conduct an equity issue immediately. In the long-run (i.e., next year) the markets will learn whether the firm was the undervalued or overvalued. Assume that managers act to maximize the long-run value of existing shareholder's claims when making the equity issue/investment decision. (a)Show that there is an equilibrium where both undervalued firms and overvalued firms issue equity to invest in the project. In this equilibrium how many shares will be sold? At what price will they be sold? What are the predicted long run stock prices for the undervalued firm and for the overvalued firm in this equilibrium? [Note: By long run I mean after any share sale and after the market learns/realizes the true value of the firm's assets.]
