ECON 3HH3 Quiz: HW2 Answer

167 views2 pages

amaranthsnake273

19 Apr 2019

School

Department

Course

Professor

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

This problem is based on the specific factors model. Consider the economy of the shire that produces cereals and swords. Each industry employs hobbits, but land is specific to the production of cereals, and metal is a specific factor in the sword industry. The amounts of land (l) and metal (m) are l=1000 and m=40, while the population size of the shire is 100. The production functions and the marginal products of hobbits" labor are as follows: The equilibrium at point a means that where hs+hc = 100. Hence, we need to solve the following system of equations: From the first equation we get hs=4*hc, so that hs=80, hc=20, and wage = pcmphc = Psmphs ~ 283. (c) because of the war of the ring, the price of a sword went up to . Calculate new wage and employment level in each sector.

Related Questions

This problem is based on the specific factors model.

Consider the economy of the Kingdom of the North that produces creals and snowmen. Each industry employs White Walkers, but land is specific to the production of cereals, and magic is a specific factor in the snowmen industry. The amounts of land (L) and magic (M) are L=1 and M=16, while the population size of the Kingdom in the North is 10 White Walkers. The production functions and the margincal products of White Walker's labor are as follows:

C=(Wc)^0.5(L)^0.5, MPWc=0.5(L)^0.5/(Wc)^0.5

S=(Ws)^0.5(M)^0.5, MPWs=0.5(M)^0.5/(Ws)^0.5

where C is the cereal output in pounds, S is the number of snowmen produced, and Wc and Ws are the numbers of White Walkers employed in the cereal and snowmen sectors, respectively.

(a) If the price of 1 pound of cereals is $2 and the rice of a snowman is $8, what is the wage rate paid to White Walkers in the Kingdom of the North? How many White Walkers work in the cereal sector? In the snowmen sector?

(b) Since "Winter is Coming", the price of a snowman went down to $4. Calculate the new wage and emplooyment level in each sector.

(c) Do the White Walkers gain or lose if the price of a snowman goes down to $4? (To answer the question, calculate their real wages before and after the price change).

amaranthwolf723

Consider the economy of the Queensland that produces juice and soup. Each industry employs workers, but land is specific to the production of juice, and dishes a specific factor in the soup industry. The amounts of land (L) and dishes (D) are L=1 and D=16, while the population size of the Queensland is 10 workers. The production functions and the marginal products of labor are:

J=(Wj)^0.5(L)^0.5, MPWj=0.5(L)^0.5/(Wj)^0.5
S=(Ws)^0.5(D)^0.5, MPWs=0.5(D)^0.5/(Ws)^0.5

where J is the juice output in litres, S is the soup output in litres, and Wj and Ws are the numbers of workers employed in the juice and soup sectors, respectively.

If the price of 1 litre of juice is $2 and the price of 1 litre of soup is $8, what is the wage rate paid to workers in the Queensland? How many workers are in the juice sector? In the soup sector?

Thank you for your help!

whitezebra886

#1. For this question, assume all the technologies are consistent with the models we have seen in class.

The Kingdom of the North and the Iron Islands produce 2 goods, sords (S) and fish (F). Assume that ports (denoted by P) is a factor to the fish industry, and mines are a factor specific to swords (denoted M). Furthermore, assume White Walker labor (L) is freely mobile across sectors.

Consider the Iron Islands. Holding constant the price of swords, suppose an increase in the price of fish of 75% and the decrease in the White Walker wage is 50%. Determine the impact of these changes on the real rentals on ports and swords by using information below (first you need to figure out the payments to all the factors):

Swords:

Sales Revenue -> PsQs = 10

Payments to White Walker Labor -> WL = 3

Fish:

Sales Revenue -> PfQf = 50

Payments to ports -> RpP = 15

tealswan869

ECON 3HH3 Quiz: HW2 Answer

Document Summary

Get access

Related Documents

ECON 3HH3 Study Guide - Final Guide: North American Free Trade Agreement, Common Agricultural Policy, International Trade

ECON 3HH3 Chapter Notes - Chapter 3: Kolmogorov Space, Diminishing Returns, Relative Price

ECN 101 Study Guide - Final Guide: Real Interest Rate, Loanable Funds, Real Wages

Related Questions