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Q: Emergency econ help - Labour economics due MARCH 8! ( No Answer,   0 Comments )
Question  
Subject: Emergency econ help - Labour economics due MARCH 8!
Category: Business and Money > Economics
Asked by: stellatrue-ga
List Price: $50.00
Posted: 08 Mar 2006 15:35 PST
Expires: 09 Mar 2006 10:35 PST
Question ID: 705121
I need help! - This is a practice question for a economics final I
have tomorrow morning and I still don't understand.

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Assume there are 100 individuals in an imaginary local economy. 
Individual labour supply: h= 30 + 2w 
h = hours worked
w = wage
Assume there are 10 identical firms in the economy. Each firm sells
output in a perfectly competitice product market extending beyond the
local economy and hires labour in a perfectly competitive labour
market.
Each firm's VMP = 90 - (L/10)
L= amount of labour demanded, in hours.

(a) Give the labour demand function of a representative firm in this
economy, given that the firm maximizes profits and can hire workers at
$w per hour.

(b) Give the labour market demand. Rewrite the firm's labour demand
function in the form L=L(w) before aggregating.

(c) Give the aggregate labour supply schedule for this economy.

(d) Give the equilibrium wage in this economy.

(e) Give the equilibrium level of employment.

Now assume the 10 competitive firms in this labour market are bought
out by one firm.

(f) How would you expect aggregate employment and wages to change in
this economy now that there is only one firm hiring workers, and
nothing else has changed? Why?

(g) What is the labour supply function facing the firm?

(h) What is the profit maximizing condition of the firm? (?w/?L = 1/200)

(i) What is the equilibrium employment in this economy?

(j) What wage will the firm pay its workers?
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