MICROECONOMICS CONNECT ACCESS CODE ONL
21st Edition
ISBN: 9781260720853
Author: McConnell
Publisher: MCG
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Question
Chapter 25, Problem 2P
Sub part (a):
To determine
Cost per mug and labor cost per mug.
Sub part (b):
To determine
Wage difference per hour between the country.
Sub part (c):
To determine
Wage difference per unit between the country.
Sub part (d):
To determine
Relationship between higher labor cost per hour and higher labor cost per unit.
Sub part (e):
To determine
Migration of unskilled labor.
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Migration between North Korea and South Korea has been prohibited since the end of the Korean War in 1953. South Korea is now much richer than North Korea and has a much higher marginal product of labor and a much higher wage rate than North Korea. If workers could migrate from North Korea to South Korea, we would expect: a. Output to fall in South Korea but rise in North Korea. b. Output to rise in each country. c. Total combined output in the two countries to fall. d. Total combined output in the two countries to rise.
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?
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?
Chapter 25 Solutions
MICROECONOMICS CONNECT ACCESS CODE ONL
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