Labor Economics Midterm Exam Take-Home Portion Spring 2011 Submit your answers t

Labor Economics Midterm Exam Take-Home Portion Spring 2011 Submit your answers to the mailbox of the grader Chenxin Xu by noon on Thursday March 24th. Please staple your answers together and write clearly. A Discussion Board has been set up on Blackboard for questions and comments. 1. Question on a Specific Production Function Let the production function of a firm be Q(L K) = 100L + 10K. The MPL = 100 and the MPK = 10 for all levels of L and K. (a) Derive the marginal rate of technical substitution for the firm. (b) Let w = $10 for 0 10. Let r = $10.
Labor Economics Midterm Exam Take-Home Portion Spring 2011 Submit your answers to the mailbox of the grader Chenxin Xu by noon on Thursday March 24th. Please staple your answers together and write clearly. A Discussion Board has been set up on Blackboard for questions and comments. 1. Question on a Specific Production Function Let the production function of a firm be Q(L K) = 100L + 10K. The MPL = 100 and the MPK = 10 for all levels of L and K. (a) Derive the marginal rate of technical substitution for the firm. (b) Let w = $10 for 0 10. Let r = $10. Graph the cost-minimization problem for the firm at Q = 1000. What amounts of L and K will the firm demand? (c) Suppose that a labor union proposes to double the wage for 0

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