Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer Questions 1-4 in your own words - I have posted this 3 times and have gotten the same answer every time - pls

Please answer Questions 1-4 in your own words - I have posted this 3 times and have gotten the same answer every time - pls do not use the other answer posted and do the math !:) I really need this answered pls & thank you! :)

Question 4: [CMP] of a discriminating firm in competitive factor markets [graded for completion]

There are two soccer teams in the MLS, labeled A and B. Both teams produce goals using foreign players, lf , and domestic players, lh (h for home). We assume that teams produce goals with a Cobb-Douglas production function:

y = f(lf , lh) = lfa lh

Let wf and wh denote wages paid to foreign and domestic players, respectively. We assume that all Canadian (and foreign) players have the same ability, but the two groups of players do not necessarily have the same ability. That is, it is not necessary that = . Team A wishes to minimize the money costs of producing a target level of output equal to y. Team B faces the same problem with the only difference that it acts as if the wage rate of the foreign player is (1 + d)wf , instead of wf , with d > 0. In his pioneering work on discrimination, Becker refers to d as a discrimination coefficient. It measures the taste for discrimination of this team, the monetary equivalent of the dislike or aversion that this team has toward hiring, in this particular case, foreign players

1. Solve each teams cost minimization problem. That is, calculate the conditional factor demand functions and cost function for both teams.

2. In a graph, plot the optimal choice of players that you solved for in part (1). Plot the solution for both teams on the same plot. Which team hires more foreign players?

3. Is the marginal productivity of foreign players higher or lower in Team B relative to in Team A? Why?

4. Which team has higher monetary costs? Be careful to separate perceived costs from actual money payments.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

Accounting For Non-Accounting Students

Authors: John R. Dyson, Ellie Franklin

9th Edition

978-1292128979, 1292128976

More Books

Students also viewed these Accounting questions