Question 2 Technological Adoption: Suppose that we have perfectly competitive input markets (for both capital and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 2 Technological Adoption: Suppose that we have perfectly competitive input markets (for both capital and labour) and output markets. Firm Tomato Harvesting produces canned tomatoes which it sells at $50 (it is a big can of tomatoes!). Suppose that initally the firm's production technology is given by: f(k,l) = I A technological innovation has occured however! A new tomato harvester has been invented by a professor at UC Davis. If the firm employs the tomato harvester, the new production technology is given by: f(k, 1) = k0.25 The rental rate of capital is $2. (a): Suppose the market wage is $3. How much more or less labour will the firm use once it switches to the new production technology with the tomato harvester in the long run? (b): Explain intuitively why labour demanded by the firm went up or down in part (a). In doing so, describe the two forces that operate when capital is introduced into the technology. (c): Suppose that there can only be one tomato harvester per farm (i.e., once adopted, capital can be considered fixed). The tomato harvester represents 1300 units of capital (note: 13000.25 = 6). At what hourly market wage will the firm switch from employing their labour only technology to adopting the tomato harvester (and employing their new production technology)? [hint: find labour demand functions for each case, then set the profits in each case equal to solve for w] Question 2 Technological Adoption: Suppose that we have perfectly competitive input markets (for both capital and labour) and output markets. Firm Tomato Harvesting produces canned tomatoes which it sells at $50 (it is a big can of tomatoes!). Suppose that initally the firm's production technology is given by: f(k,l) = I A technological innovation has occured however! A new tomato harvester has been invented by a professor at UC Davis. If the firm employs the tomato harvester, the new production technology is given by: f(k, 1) = k0.25 The rental rate of capital is $2. (a): Suppose the market wage is $3. How much more or less labour will the firm use once it switches to the new production technology with the tomato harvester in the long run? (b): Explain intuitively why labour demanded by the firm went up or down in part (a). In doing so, describe the two forces that operate when capital is introduced into the technology. (c): Suppose that there can only be one tomato harvester per farm (i.e., once adopted, capital can be considered fixed). The tomato harvester represents 1300 units of capital (note: 13000.25 = 6). At what hourly market wage will the firm switch from employing their labour only technology to adopting the tomato harvester (and employing their new production technology)? [hint: find labour demand functions for each case, then set the profits in each case equal to solve for w]
Expert Answer:
Answer rating: 100% (QA)
a To determine how much more or less labor the firm will use when it switches to the new production technology with the tomato harvester we need to compare the labor usage between the two technologies ... View the full answer
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
Posted Date:
Students also viewed these economics questions
-
1 1" 12.5' 21 22 = 20 20 20 20 20 12 1.25" 12.5' 3 13 1.25" 12.5' 5 9 8 O 14 2'1 12% 1.5" 6' 6.5' 12.5' 1.5" 12.5' 1.25" 12.5' ..E 12' 15 16 17 1.25" 12.5' 18 06 19 1" 12.5' 208 20 10 23 24 25 20 26...
-
Minimum Wage Labor Subsidy (contd): In exercise 13.10, we investigated the firms decisions in the presence of a government subsidy for hiring minimum wage workers. Implicitly, we assumed that the...
-
From the attached article: 1) Introduction - Describe the case. What happened? When did that happen? Who got involved? 2) Identify the link between the case and global market changes?...
-
Broadmore Corporation acquired 75 percent of Stem Corporations common stock on January 1, 20X8, for $435,000. At that date, Stem reported common stock outstanding of $300,000 and retained earnings of...
-
How does an autonomous tightening or easing of monetary policy by the Fed affect the aggregate demand curve?
-
(a) A 10-mm-diameter Brinell hardness indenter produced an indentation 1.62 mm in diameter in a steel alloy when a load of 500 kg was used. Compute the HB of this material. (b) What will be the...
-
Explain how each of the following conditions would be expected to affect the value of the Mexican peso. SITUATION a. Mexico suddenly experiences a high rate of inflation. b. Mexico's interest rates...
-
1. As DIY Stores built its online presence, how well did it organize around its core capabilities? 2. DIY Stores is a large national chain. What impact did its size have on its agility? 3. How could...
-
The stockholders equity accounts of Flounder Corp. on January 1, 2022, were as follows. Preferred Stock (7%, $100 par noncumulative, 7,500 shares authorized) $450,000 Common Stock ($4 stated value,...
-
Tableau Dashboard Activity 5-1 Account for Uncollectible Accounts Using the Aging Method Review the Tableau visualization, and then answer the questions that follow. Total Accounts Receivable Amount...
-
ework C2 1 Saved Rochester Construction begins operations in March and has the following transactions. March 1 Issue common stock for $15,500. March 5 Obtain $7,900 loan from the bank by signing a...
-
The length of the thorax in a population of male fruit flies is approximately Normal with mean 0.800 millimeters (mm) and standard deviation 0.078 mm. What percent of male fruit flies have a thorax...
-
1. when the first segment is lost during the three-way handshake, Where are these segments being stored? Explain. 2. Cwind and Cwindmultiplier determine retransmission timing during the recovery...
-
An English professor at a Midwestern university was called by the academic appeals referee and told that a student in her introductory writing course had filed a grievance about a grade he received...
-
Social media in particular has been a game changer for brand building, customer relations, and customer satisfaction. Shoppers are increasingly turning to social media for retail and often look for...
-
Prima Corporation acquired 7 0 percent interest in Serumpun Corporation on January 1 , 2 0 2 1 for $ 4 2 0 , 0 0 0 in cash, at which time Serumpun's capital structure consisted of capital stock of $...
-
Calculate the present value of $1,057 for a period of 7 yearswhich has discounted interest of 3.5%, each year $20 are added. 2 answers
-
A 6-lb shell moving with a velocity ?? v0k explodes at point D into three fragments which hit the vertical wall at the points indicated. Fragments A, B, and C hit the wall 0.010 s, 0.018 s, and 0.012...
-
Primex Marketing, Inc., formed in 1982, is an international niche marketer of Roleez wheels and a limited line of products using the wheels. The patented wheels use very low pressure, soft, wide, and...
-
Aquabear AB was founded in 1970 in Stockholm, Sweden, as a small private company that manufactured maritime leisurewear clothing. In 1975 the company started a line of ski clothing using the brand...
-
As an export marketer becomes more or less permanent in doing business in multi-foreign markets, it almost inevitably faces the issue of standardization vs. adaptation of its advertising programme....
-
1. Several successful chains of warehouse stores such as Costco have merchandising policies that differ considerably from those of traditional department stores. Identify characteristics of these...
-
The Ibunez Tool Company has two products: a plain circular saw and a fancy circular saw. The plain circular saw sells for $66 and has a variable cost of $50. The fancy circular saw sells for $100 and...
-
The following is the income statement of a manufacturer of blue jeans: Hunter had manufactured 2 million units, which had been sold to various clothing wholesalers and department stores. In early...
Study smarter with the SolutionInn App