You have data on the average productivity of workers for firms across Australia. You also observe various firm-specific characteristics. Which of the following statements is true: Select one: O a. You should weigh for the square root of the number of workers per firm to address for heteroskedasticity. O b. You should control for the number of workers per firm to address for heteroskedasticity. O C. You should not include small firms in the sample because their measure of average productivity is very noisy O d. None of the statements is true
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- hy does a measure of labor productivity—the output produced per worker– rise for many firms during recessions? During the boom years period of 2005through November 2007, the annual average output per worker was lower in U.S.manufacturing than during the Great Recession of 2007–2009 as well during therelatively low-demand years since then through 2013.Firms produce less output during recessions as demand for their products falls.Consequently, firms typically lay off workers during recessions. Thus, whetheroutput per worker rises or falls depends on whether output or employment fallsby more. The labor productivity pattern over the business cycle differs across in-dustries. If we know about a firm’s production process, can we predict whetheroutput produced per worker will rise or fall with each additional layoff?The profit function is the same as in Question 40 and 41. Profit =200L+100K-10L^2-20K^2+20KL. After determining the profit-maximizing level of Labor (L) 25 and Capital (K) 15 how much are the profits of the firm at the profit-maximizing levels of L and K? Its not 46!.Suppose an auto manufacturer has one factoryin the United States and one in Mexico. The automanufacturer produces the same number of carsand the same models in each factory but hiresmore workers in Mexico than in the United States.Give an explanation for the discrepancy in theamount of labor hired in each location
- A firm can use three different production technologies, with capital and labour requirements at each level of output as follows:Daily OutputTechnology 1 Technology 2 Technology 3K L K L K L100 3 7 4 5 5 4150 3 10 4 7 5 5200 4 11 5 8 6 6250 5 13 6 10 7 8a) Suppose the firm is operating in a high-wage country, where capital cost is $100 per unit per day and labour cost is $80 per worker per day. For each level of output, which technology is the cheapest?b) Now suppose the firm is operating in a low-wage country, where capital cost is $100 per unit per day and labour cost is $40 per worker per day. For each level of output, which technology is the cheapest?c) Suppose the firm moves from a high-wage to a low-wage country but that its level of output remains constant at 200 units per day. How will its total employment change?Suppose that a car dealership wishes to see if efficiency wages will help improve its salespeople’s productivity. Currently, each salesperson sells an average of one car per day while being paid $20 per hour for an eight-hour day.a. Suppose that if the wage is raised a second time to $40 per hour, the number of cars sold rises to an average of 2.5 per day. What is now the labor cost per car sold? $______ per vehicleb. If the firm’s goal is to maximize the efficiency of its labor expenditures, which of the three hourly salary rates should it use: $20 per hour, $30 per hour, or $40 per hour? $______ per hourc. By contrast, which salary maximizes the productivity of the car dealer’s workers (cars sold per worker per day)? $_______ per hour32. Assuming labor is the only cost for production, a firm hires labor up to the point at which the wage equals (i) the value of the marginal product of labor, (ii) the marginal cost of an additional unit of output, (iii) output price multiplied by the marginal product of labor, for maximum profit. O (i) and (iii) only O (i) and (ii) only (ii) and (iii) only O (i), (ii), and (iii)
- Suppose that government wishes to promote more capital intensive agriculture and subsidises agricultural capital equipment in order to achieve this. a) Using an isoquant map of the tradeoff between capital and labour, show how the reduced cost of capital will affect the individual farmer’s decision problem. b) Using a production function approach with labour as the variable input, show how the reduced cost of capital will affect the individual farmer’s decision problem. c) What overall effect on agricultural employment would you expect, given your answers in (a) and (b)?In the context of the Heckscher-Ohlin model with the two production factors capital andlabor, we have discussed that industries differ in their labor and capital-intensities.(a) Define labor and capital-intensity of an industry.(b) Explain what we mean when we assume that there are no factor intensity reversals.Illustrate the case of a factor intensity reversal using a suitable diagram.(c) Human activity, particularly the production and consumption of energy-intensive goods and the associated emissions of carbon dioxide into the atmosphere, is a major factor driving global warming. Therefore, the European Union will introduce a carbon border adjustment mechanism (CBAM) in the near future. Imagine a variant of the Heckscher-Ohlin model with two production factors labor and energy used in two industries. Define labor and energy intensity of industry in such a model. Can you think of examples of an energy-intensive industry versus a labor-intensive industry?Suppose you observe over the last 15 years that the percentage growthin output was 25%, percentage growth in capital was 10%, and percentagechange in labor was 20%. Assume elasticity of output with respect to capitalis 0.4 and elasticity of output with respect to labor is 0.6. Calculate thecontributions to output growth from capital and labor, and then solve forproductivity growth. Please show equation throughout the whole process
- Answer the following questions on the basis of this information for a single fifirm: total cost of capital = $1000; price paid for labor = $12 per labor unit; price paid for raw materials = $4 per raw-material unit. a. Suppose the firm can produce 5000 units of output by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 5000 units of output?b. Now assume the firm improves its production process so that it can produce 6000 units of output by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average cost of producing the 6000 units of output?c. Refer to your answers to 8a and 8b and explain how process innovation can improve economic efficiency.In a certain factory the production is Q = 120K1/2L1/3 units, where K represents the capital investment measured in units of $ 1,000 and L the size of the labor force measured in worker-hours. Currently, the capital investment is $ 250,000 and 400 worker-hours are employed. Apply the total differential of Q to estimate the resulting change in output, if the capital investment increases by $ 500 and labor increases by 2 hours-worker.A firm can use three different production technologies, with capital and labour requirements at each level of output as follows: Technology 1 Technology 2 Technology 3 Daily Output K L K L K L 100 3 7 4 5 5 4 150 3 10 4 7 5 5 200 4 11 5 8 6 6 250 5 13 6 10 7 8 a. Suppose the firm is operating in a high-wage country, where capital cost is $100 per unit per day and labour cost is $80 per worker per day. For each level of output, which technology is the cheapest? Now suppose the firm is operating in a low-wage country, where capital cost is $100 per unit per day but labour cost is only $40 per unit per day. For each level of output, which technology is the cheapest? Suppose the firm moves from a high-wage to a low-wage country but its level of output remains constant at 200 units per day. How will its total employment change?