Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer questions: a,b,c,d Consider a rm that sells its output in a perfectly competitive product market, and hires labour in a perfectly competitive labour

please answer questions: a,b,c,d

image text in transcribed
Consider a rm that sells its output in a perfectly competitive product market, and hires labour in a perfectly competitive labour market. The marginal revenue product of labour (in dollars) is given by: MRPL=302L (a) Assuming that the rm is a prot maximize and can hire labour at SW per unit. derive its labour demand function. (b) Given that there are 10 identical firms (like that described in a) in the industry. derive the market labour demand function. If 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 the money directly into the hands of workers. They propose that the government should directly give workers and additional $3 for each unit of labour worked. Evaluate the argument put forward by the opposition parties by comparing workers' employment and income (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 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

Business Law Today The Essentials

Authors: Roger LeRoy Miller

12th Edition

035703791X, 9780357037911

More Books

Students also viewed these Economics questions