Problem #1 Competitive Equilibrium Find the competitive equilibrium if types are not observable for the following labor market. Types: 0, = 3, 0, = 6, 0, = 9 Lottery: p(0 = 0,) = 1/3 , p(0 = 0,) = 1/3 , p(0 = 0,) = 1/3 Reservation wages: r(0,) = 3, r(0,) = 9, r(0,) = 6 3, e, = 6, 0, = 9 %3D 2. %3D %3D %3D %3D

Problem #1 Competitive Equilibrium Find the competitive equilibrium if types are not observable for the following labor market. Types: 0, = 3, 0, = 6, 0, = 9 Lottery: p(0 = 0,) = 1/3 , p(0 = 0,) = 1/3 , p(0 = 0,) = 1/3 Reservation wages: r(0,) = 3, r(0,) = 9, r(0,) = 6 3, e, = 6, 0, = 9 %3D 2. %3D %3D %3D %3D

Survey of Economics (MindTap Course List)

9th Edition

ISBN:9781305260948

Author:Irvin B. Tucker

Publisher:Irvin B. Tucker

Chapter4: Markets In Action

Section: Chapter Questions

Problem 17SQ

See similar textbooks

Similar questions

A few years ago, the Boston Globe reported that the city of Boston planned to spend $14 million to convert the FleetCenter sports arena and entertainment center into an appropriate venue for the Democratic National Convention (DNC). The city engaged Shawmut Design and Construction in a contractual relationship to complete the work, which was supposed to start 48 days prior to the commencement of the DNC on July 26. However, when negotiations between Boston’s mayor and the police union broke down, the Boston Police Patrolmen’s Association took to the picket lines surrounding the FleetCenter and prevented construction crews from beginning the work. The Globe reported that “a truck attempting to deliver steel turned around after a crowd of union members stood at a chain-link gate in front of the arena, shouting ‘back it up,’ and ‘respect the line, buddy.’” Moreover, the Globe reported that “On-duty police officers, who had been instructed to prevent pickets from restricting access, did…
See pictures below... So, given the summary table of the two different market structures, you can infer that, in general, the price is lower under a _________, and the quantity is lower under a ______________.
Imagine a signaling model where there are two types of workers, low-productivity workers with a productivity of 10, and high-productivity workers with a productivity of 30. The proportion of low-productivity workers is .5. Firms are competitive and obtain profit equal to the productivity of the worker they hire. Workers can obtain one of three levels of education: e1, e2, and e3. Workers get utility equal to their wage minus the cost of education. Wages must be between 10 and 30. The cost of getting an education for low-productivity workers is e1 = 0, e2 = 9, e3 = 18. The cost of getting an education for high-productivity workers is e1 = 0, e2 =4, e3 = 8. Are there any separating equilibria in this model? If so, find them, if not show why they do not exist.
Imagine a signaling model where there are two types of workers, low-productivity workers with a productivity of 10, and high-productivity workers with a productivity of 30. The proportion of low-productivity workers is .5. Firms are competitive and obtain profit equal to the productivity of the worker they hire. Workers can obtain one of three levels of education: e1, e2, and e3. Workers get utility equal to their wage minus the cost of education. Wages must be between 10 and 30. The cost of getting an education for low-productivity workers is e1 = 0, e2 = 9, e3 = 18. The cost of getting an education for high-productivity workers is e1 = 0, e2 =4, e3 = 8. A) Are there any pooling equilibria in this model? If so find all of them, if not, show why they do not exist.
Consider Figure 9.1. Assume SFK and Timken merge to become the MVD Company with new cost reductions, indicated by MC1=AC1, which result from changes in work by MVD Company employees that lead to higher worker productivity. Compare to the original competitive equilibrium, the effect of MVD Company's formation on welfare now isA.) a gain of $5.50B.) a gain of $2.50C.) a loss of $5.50D.) no change .
Royal Dutch Shell has been doing business in Nigeria since the 1920s, and has announced new plans to develop oil and gas projects there. However, over the years Shell has confronted a series of episodes involving country risk. Shell’s operations are centred in Nigeria’s Ogoni region, where the local citizens have protested Shell’s drilling and refining activities, which are said to spoil the natural environment and reduce the amount of available farmland. Protestors also accuse Shell of extracting wealth from the region without adequately compensating local residents. Ogonis sabotaged Shell’s operations to such an extent that the firm suspended parts of its Nigerian operations. Shell also came under pressure to divest its Nigerian operations and to pay reparations to the locals. What proactive steps can Shell take to anticipate future country risk? What should Shell do to deal more effectively with country risk?
(ALL OWNERSHIP GOES TO CENGAGE) The following graph gives the labor market for laboratory aides in the imaginary country of Sophos. The equilibrium hourly wage is $10, and the equilibrium number of laboratory aides is 150. Suppose the federal government of Sophos has decided to institute an hourly payroll tax of $4 on laboratory aides and wants to determine whether the tax should be levied on the workers, the employers, or both (in such a way that half the tax is collected from each party). Use the graph input tool to evaluate these three proposals. Entering a number into the Tax Levied on Employers field (initially set at zero dollars per hour) shifts the demand curve down by the amount you enter, and entering a number into the Tax Levied on Workers field (initially set at zero dollars per hour) shifts the supply curve up by the amount you enter. To determine the before-tax wage for each tax proposal, adjust the amount in the Wage field until the quantity of labor supplied equals the…
Consider a competitive market in which the equilibrium determined by the intersection of Supply and Demand. If the market price has decreased and the market quantity has increased, then we can infer that Group of answer choices a) the demand curve has shifted to the right. b) the demand curve has shifted to the left. c) no shifts have occurred. d) the supply curve has shifted to the left. e) the supply curve has shifted to the right.
A move from point B to point A Select one: a. would be voluntarily accepted by neither Anita nor Roberta since each would be giving up something. b. would be Pareto optimal because it moves the society to the contract curve. c.would be voluntarily accepted by both Anita and Roberta. d.would be voluntarily accepted by Roberta but not by Anita.
Harriet McNeil, proprietor of McNeil's Auto Mall, believes that it is good business for her automobile dealership to have more customers on the lot than can be served, as she believes this creates an impression that demand for the automobiles on her lot is high. However, she also understands that if there are far more customers on the lot than can be served by her salespeople, her dealership may lose sales to customers who become frustrated and leave without making a purchase. Ms. McNeil is primarily concerned about the staffing of salespeople on her lot on Saturday mornings (8:00 a.m. to noon), which are the busiest time of the week for McNeil's Auto Mall. On Saturday mornings, an average of 6.8 customers arrive per hour. The customers arrive randomly at a constant rate throughout the morning, and a salesperson spends an average of one hour with a customer. Ms. McNeil's experience has led her to conclude that if there are two more customers on her lot than can be served at any time…
Auctions can be an important tool for selling goods and gathering information. Auctions are used in multiple venues including agriculture, eBay, and distressed asset sales. The seller does not have to worry about estimating demand and setting a price because the demanders will do that through the auction process. Write an essay examining the value of auctions in the economy by addressing the following items. Explain the difference between oral auctions and second-price auctions, including how they work and their results. Use the expected value information to illustrate how having more bidders in an oral auction will likely result in a higher winning bid. Explain how the number of bidders in a common value auction affects the outcome of the auction. Relate this to the effect on price in different market structures based on the number of producers. Auctions lead to outcomes where buyers reveal their value for the products being auctioned. To successfully price discriminate, firms often…
Botswana and South Africa both produce laptops. Botswana produces the Lenovo brand whereas South Africa produces the Acer brand. The demand and supply structure in both countries are given by the Dixit-Stiglitz model, with an elasticity of substitution equal to two in both countries. Assume that the laptop market in Botswana is much large than in South Africa. In both countries, the marginal labour input requirement is one and the fixed labour input per variety is 2.5. Botswana's labour employment in the cell phone industry is 20 million people whereas that of South Africa is 10 million people. Determine the number of varieties that will be supplied to Botswana and South Africa laptop markets in Autarky.