Economics Assignment: Production, Labor, and Wage Analysis

This economics assignment involves analyzing a production function, specifically a Cobb-Douglas production function, with the inputs being labor and capital. The assignment explores the relationship between labor and capital, calculating the output, marginal product, and the impact of wages and market dynamics. It examines the effects of minimum and maximum wages on production costs. The assignment also explores the impact of labor and capital on the firm. The assignment explores the concepts of marginal analysis, including marginal cost and the effects of various economic policies on the firm's operations, providing a comprehensive look at the economics of production and labor.

Running head: ECONOMIC ASSIGNMENT 1
Economic Assignment
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ECONOMIC ASSIGNMENT 2
Economic Assignment
A simple economy produces just one product, Q, with two factors of production M (men) and A
(acres). There are 100 identical firms, each with production function: Q = 10M^1/3 A^2/3 to the
economy as a whole, M is in absolutely inelastic supply at M = 900, and A is in absolutely
inelastic supply at A = 600
1. The men and acres employed by the firm;
The men and acres employed will be 900 and 600 respectively by the firm
2. The marginal product of men and the marginal product of acres;
Marginal product of men will be given by (900)1/3 =300
Marginal product of acres will be given by 6002/3 =120,000
3. The wage per man and rent per acre;
Wage per man=900*1/3=300
Rent per acre=600*2/3=400
4. The marginal cost
Marginal cost per man will be 900-300=600
Marginal cost per acre will be 600-400=200
5. The absolute share of the two factors.
A=400

ECONOMIC ASSIGNMENT 3
M=300
b. Do the same, on the assumption that a minimum wage equal to 5 units of Q has been legally
established and enforced. Explain.
A=400*5=2000
M=300*5=1500
c. What would be the consequences of establishing a maximum wage equal to 3 units of Q?
What if the maximum wage were 2? Explain.
Setting a maximum wage of 3 units of Q will consequently increase the cost of the firm while
setting maximum wage of 2 units of Q will reduce variable cost of the firm. This is because at 3
units of Q, the marginal cost is higher than at 2 units of Q
References

ECONOMIC ASSIGNMENT 4
Borjas, G. J. (2016). Labor economics. Boston [etc.: McGraw-Hill Education.
Ehrenberg, R. G., & Smith, R. S. (2018). Modern labor economics: Theory and public policy.
London: Routledge.