Question

3. Suppose that a firm’s technology is such that it must put 6 workers at each...

3. Suppose that a firm’s technology is such that it must put 6 workers at each of 10 machines. This means that its short-run labor demand elasticity is zero. Which of Marshall’s laws of derived demand support this idea?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The Marshallvs law of derived demand states that through substitution effect, the labor demand elasticity will be higher if there is many substitute available for the employed category of labor.

In this case, the labor and capital are used in fixed proportion. In the short run the amount of capital is given to the firm and cannot be hanged. Hence, there is no substitution between labor and capital. This implies, due to substitution law of derived demand the own elasticity of labor demand in the short run wilbe zero.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose that a firm’s technology is such that it must put 6 workers at each of...
Suppose that a firm’s technology is such that it must put 6 workers at each of 10 machines. This means that its short-run labor demand elasticity is zero. Which of Marshall’s laws of derived demand support this idea?
Question 2 (Technology). A local factory making greeting cards employs only workers and machines. Let x1...
Question 2 (Technology). A local factory making greeting cards employs only workers and machines. Let x1 represent workers and x2 represent machines. The firm’s production function is: f(x_1, x_2)=10*min(x_1, 1/2x_2) a) Draw an isoquant representing a quantity of 100 units and an isoquant representing a quantity of 200 units. Label two points on each isoquant. b) Suppose the firm wants to produce 300 cards. The price of an hour of labor is $20 and the price of a machine hour...
A firm has a daily production function q = 2.5L^1/3K^1/3. Currently, the firm rents 8 pieces...
A firm has a daily production function q = 2.5L^1/3K^1/3. Currently, the firm rents 8 pieces of equipment. The amount of equipment is fixed in the short run. The unit wage rate is $25 while the rental cost of capital is $100. Find the short run production function. Find the number of workers the firm wishes to employ to produce q units (the short run conditional demand for labor). Find the firm’s short run total cost Find the firm’s short...
QUESTION 17 Suppose that a firm’s short-run total costs are given by STC = 0.25q2 +...
QUESTION 17 Suppose that a firm’s short-run total costs are given by STC = 0.25q2 + 10q + 500.  If this firm behaves as a price taker, what is the equation of the short-run supply? q=(1/2)p-10 q=(1/2)p+10 q=2p+20 q=2p-20 4 points    QUESTION 18 A firm faces the following demand curve: Q=100-4P. Total costs are TC=14Q. What level of output maximizes profit? 43/2 88 44 14 4 points    QUESTION 19 Suppose there are 1000 firms each with a short run...
Suppose a firm’s production function is q = f(K,L) = (K)1/3 (L)1/3 (a) Set up the...
Suppose a firm’s production function is q = f(K,L) = (K)1/3 (L)1/3 (a) Set up the firm’s problem and solve for K∗ and L∗ here. Show your work to derive the value of K∗ and L∗ otherwise no marks will be awarded. Note: your solution 11 should be: ∗ K = P^3/27r2w L = P^3/27w2r How much does the firm produce (i.e. what is q∗)? What is the profit earned by this firm (i.e. what is π∗)? (b) The firm...
Consider a publicly available technology of producing a good that is characterized by the variable cost...
Consider a publicly available technology of producing a good that is characterized by the variable cost function VC(Q) = 1/2(Q^2) and fixed costs FC = 2 for a firm that operates the technology. In the short run, fixed costs are unavoidable. In the long run, fixed costs are avoidable and it is free for any firm outside of the market to enter, should it want to. In the short run, the set of firms in the market is fixed. The...
Consider a publicly available technology of producing a good that is characterized by the variable cost...
Consider a publicly available technology of producing a good that is characterized by the variable cost function V C (Q) = 1 Q2 and fixed costs F C = 2 for a firm that operates the technology. In 2 the short run, fixed costs are unavoidable. In the long run, fixed costs are avoidable and it is free for any firm outside of the market to enter, should it want to. In the short run, the set of firms in...
Consider a publicly available technology of producing a good that is characterized by the variable cost...
Consider a publicly available technology of producing a good that is characterized by the variable cost function VC (Q) = (1/2)Q2 and fixed costs FC = 2 for a firm that operates the technology. In the short run, fixed costs are unavoidable. In the long run, fixed costs are avoidable and it is free for any firm outside of the market to enter, should it want to. In the short run, the set of firms in the market is fixed....
Suppose an industry demand curve is P = 90 − 2Q and each firm’s total cost...
Suppose an industry demand curve is P = 90 − 2Q and each firm’s total cost function is C = 100 + 2q 2 . (a) (6 points) If there is only one firm in the industry, find the market price, quantity, and the firm’s level of profit. (b) (6 points) Show the equilibrium on a diagram, depicting the demand curve, and MR and MC curves. On the same diagram, mark the market price and quantity, and illustrate the firm’s...
Consider a firm whose production technology can be represented by a production function of the form...
Consider a firm whose production technology can be represented by a production function of the form q = f(x1, x2) = x α 1 x 1−α 2 . Suppose that this firm is a price taker in both input markets, with the price of input one being w1 per unit and the price of input two being w2 per unit. 1. Does this production technology display increasing returns to scale, constant returns to scale, decreasing returns to scale, or variable...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT