Answer:
Labor Demand and Supply
a) Equilibrium Wages = $25 and Equilibrium employment level = 2
b) $30 cannot be the market clearing wage. At $30 labor supply will outstrip labor demand. In that situation, there is no equilibrium of labor supply and demand.
c) If 5 workers are hired at a wage of $30, the wage bill will be equal to $150 ($30 * 5) and the 5 workers will be receiving an economic rent of $5 each ($30 - 25). The total economic rent is $25 ($5 * 5).
d) If workers earn economic rent, it does not mean that they are being overpaid. It simply means that they are being paid above the equilibrium wage.
e) The total wage will be $1,200($30 * 40). The total economic rent gained by the employed union members is $200 ($5 * 40). The economic rent lost by limitation on union labor cannot be quantified with the given information.
Explanation:
a) Data and Calculations:
Demand: LD = 100 − 2W
Supply: LS = 2W
Equilibrium wage and employment level exist where Demand = Supply
i.e. LD = LS = 100 - 2W = 2W
Therefore 2W = 100 - 2W
= 4W = 100
= W = 100/4
= W = 25
Equilibrium Wages = $25
Equilibrium employment level = 2
b) Economic rent is the additional or extra income which a resource earns or generates over the normal earnings as a result of being put to use in its present form. This means that the extra income could be lost without jeopardizing the deployment of the resource to some productive use.
Answer:
people can perform more efficiently if they master just one task rather than all tasks.
Explanation:
Specialisation is the process by which a person becomes proficient at one particular ntask and in so doing they increase efficiency of production process.
In this scenario a single person performing the task can do one to three auto repairs per day. But if one person removed the old part, another person prepared the new part, and a third person installed the new part, they were able to complete up to twenty repairs per day.
That is an average of 20 ÷ 3= 6.667 per person per day.
This shows that people can perform more efficiently if they master just one task rather than all tasks.
Answer:
The correct answer is letter "A": A foreign acquisition.
Explanation:
In corporate terms, a foreign acquisition is the purchase of a company or the division of a company. Some acquisitions are paid in cash while others are paid with a combination of cash and the acquiring company stock or even financed with debt which is called a leveraged buyout.
Foreign acquisitions are often done by another company in a similar line of business who wishes to use the purchased business to improve its own operations.
Answer:
The average consumption is higher in University A. than in University B
Explanation:
Marginal cost is known as the cost borne when an extra unit of output is being produced. Sunk cost is the cost once incurred cannot be recovered
The marginal cost at university A is $0 because they dont have to pay anything over and above $500. This $500 is the sunk cost for students at university A. The marginal cost at university B is $2 because they can consume only 250 pounds of food making them careful about the quantity of food they eat.
Sunk cost is not considered while making a decision, so the marginal cost of University A is $0 and that in University B is $2.
Therefore, we are concluding that the average consumption is higher in University A.
