SOLUTION: ECON University of New Hampshire Labor Force Problem Solution Discussion

Hey buddy,I am done with your work and have attached both a pdf and a word document. All the best and please invite me for future questions.If you need revision, I am willing to provide one.Question 1a) Wage rate/market price = MPL10/0.05 = 300 – 2L200 = 300 – 2LL = 50b) Wage rate/market price = MPL10/0.10 = 300 – 2L200 = 300 – 2LL = 100Question 2a) The marginal rate of technical substitution is an economic theory that illustrates the rate atwhich one factor must decrease so that the same level of productivity can be maintainedwhen another factor is increased.MRTS = change in capital/change in laborMRTS = [(6-4)/4]/[(250-200)/200]MRTS = 2b) MRTS = change in capital/change in laborMRTS = [(6-4)/4]/[(300-200)/200]MRTS = 1MRTS would decrease because there is a bigger change of capital input.c) A graph showing the isocost lined) Amazon will use more of both labor and capital. This is because the is cost will shiftoutwards, leading to an increase in both the usage of both inputs. This is shown by the graphbelow. The scale effect (from P to Q) encourages the firm to expand, increasing the firm’semployment. The substitution effect (from Q to R) encourages the firm to use a more laborintensive method of production, further increasing employment.Question 3a) We will need 600 minutes of both the capital and labor as shown in the graph below.b) The combination will remain the same. However, the isocost function will change and willpivot as shown below and capital will be demanded more as it is cheaper.c) It is inelastic because it is a necessity by users. This product has no substitute and a change inprice leads to a relatively small change in demand if any at all.Question 4a) Sweet dreams will use a combination of 0 mastery pastry chef and 40 culinary schoolstudents as that is cost minimizing combination. The allocation is shown by point A on thegraph below.b) Given that these are substitute inputs, Sweet dreams will use a combination of 20 masterypastry chef and 0 culinary school students as that is cost minimizing combination. Theallocation is shown by point B on the graph above.c) It is elastic. There is a substantial change in quantity demanded when another economicfactor changes such as the wage in this case.Question 5a) This case will reduce the likelihood because of the reduction in the number of patients thatspend nights in the hospitalb) This case will reduce the likelihood because already the annual payroll of the nurses takes ahalf of the budget by the hospital and this needs to be consolidatedc) It is elastic. Elastic demand is when a product or service’s demanded quantity changes by agreater percentage than changes in price. This means that the unionization has a less strongcase.d) The union has a case which is no strong. Looking at three factors, they are most likely to nothave their salaries increased. If unions ‘force employers off their demand curves,’ then themeasured elasticity of substitution should be lower where unionization is stronger. Also, thedecrease in the number of patients admitted reduce the likelihood because there is alreadyless work at the hospital. The second case is that the total annual costs of running the hospitalare $120 million. Total annual payroll for nurses is $60 million (the highest share of anysingle type of health professional). This case will reduce the likelihood because already theannual payroll of the nurses takes a half of the budget by the hospital and this needs to beconsolidated. Given this, the demand for nurses is therefore elastic. Elastic demand is when aproduct or service’s demanded quantity changes by a greater percentage than changes inprice. This means that the unionization has a less strong case. Given that the strength of laborunions strongly influence whether such labor unions are able to protect the welfare andinterests of workers and promote fairness and impartiality among them. In addition, it alsoencourages employers to realize the existence and significance of labor unions as therepresentative of workers in any state enterprise or company. Employers will be less likely totake advantage of or exploit workers, and any unfair labor practices will be less likely to takeplace within the enterprise or company. The workplace atmosphere will move toward a winwin outcome. The bargaining power of the labor force is affected by the degree ofunionization, management/labor harmony, and availability of critical skills. The bargainingpowers of customers, suppliers, and the labor force are all important factors that affect profitsand cash flow. Others include the degree of government regulation and global exposure. Therelative bargaining power of buyers depends on their primary buying criteria (i.e., price,quality/reliability, service, convenience, or some combination), price sensitivity or elastic,switching costs and their number and size as compared to the number and size of suppliers.Given all of this, the unionization has a less strong case.Question 1a) Wage rate/market price = MPL10/0.05 = 300 – 2L200 = 300 – 2LL = 50b) Wage rate/market price = MPL10/0.10 = 300 – 2L200 = 300 – 2LL = 100Question 2a) The marginal rate of technical substitution is an economic theory that illustrates the rate atwhich one factor must decrease so that the same level of productivity can be maintainedwhen another factor is increased.MRTS = change in capital/change in laborMRTS = [(6-4)/4]/[(250-200)/200]MRTS = 2b) MRTS = change in capital/change in laborMRTS = [(6-4)/4]/[(300-200)/200]MRTS = 1MRTS would decrease because there is a bigger change of capital input.c) A graph showing the isocost lined) Amazon will use more of both labor and capital. This is because the is cost will shiftoutwards, leading to an increase in both the usage of both inputs. This is shown by the graphbelow. The scale eff…

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