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Author Question: The demand for labor is given by L(w) = 1000 - .5w, where w is the minimum wage. Find the level of w ... (Read 59 times)

jasdeep_brar

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on: Jul 1, 2018
The demand for labor is given by L(w) = 1000 - .5w, where w is the minimum wage. Find the level of w that maximizes the total wage payment, wL(w). What is the wage-elasticity of labor demand at the maximizing minimum wage?
 
  What will be an ideal response?

Question 2

John Rawls' theory of justice does not take into account the disincentive effects of redistributive programs.
 
  a. True b. False


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underwood14

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Reply #1 on: Jul 1, 2018
Answer to Question 1

We maximize w(1000 - .5w), which occurs where the derivative is zero:
1000 - w = 0
Thus, w = 1000. The elasticity at that point is E = (dL/dw)(w/L) = .5(1000/500 ) = 1.

Answer to Question 2

b


jasdeep_brar

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Reply 2 on: Jul 1, 2018
Great answer, keep it coming :)

cdmart10

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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