Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

hlw , this is a long question . could you please give me anwser with labeling . thanks a. Consider a firm that sells its

hlw , this is a long question . could you please give me anwser with labeling . thanks
image text in transcribed
image text in transcribed
a. Consider a firm that sells its output in a perfectly competitive product market, and hires labour in a perfectly competitive labour market. The value of the marginal product of labour (in dollars) is given by, VMPL=302L Assuming that the firm is a profit maximizer and can hire labour at SW per unit, derive its labour demand function. b. Given that there are 10 identical firms (like the firm described in part (a)) in the industry, show that the market labour demand is given by, LD=1505W The supply function of labour to this market is given by, L5=10W Solve for the equilibrium wage and level of employment in this market. c. In an effort to stimulate employment in this industry, the government offers firms a subsidy of $3 per unit of labour hired. Analyze the effects of the subsidy on the level of employment and the workers' wages. d. The government's opposition parties accuse the government of catering to "corporate welfare bums" with the wage subsidy/handout. They suggest that the money would be better spent by putting it directly into the hands of the workers. They propose that the government should directly give workers an additional $3 for each unit of labour worked. Evaluate the argument put forward by the opposition parties by comparing workers' employment and incomes (wages plus government bonus) to the scheme in part (c)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions