Competitive Market

In a perfectly competitive market, individual firms can not impact the market price of their good or service. True False

Cost of Running a Store

Bob runs a hardware store in Montana. His inventory costs him $75,000. Prior to opening his hardware store, Bob worked as an investment banker earning $175,000 per year. He pays his employees $150,000 per year. Economists would say Bob’s cost of running the hardware store is $225,000 per year. True False

Labor Supply and Demand Scenario

• Write a scenario that would cause a shift in labor supply and demand. The following areas have had high job growth rates and can be used for your scenario: transportation, insurance, and real estate industries. o What is the area of employment? o Why has this shift occurred? o In what direction would the shift in labor supply and demand go? o What would be its effect on the equilibrium of the labor market? Course Syllabus

Reservation Wage

I understand the definition of a reservation wage, but I am not sure how to essentially compute it. Here is a typical question I have come across: John's utility function is U(C, L) = C*L Where C is Consumption, and L is Leisure. The most Leisure John can get in a week is 168 hours. Regardless how many hours a week John works, he gets a $200 allowance from his father. What is his reservation wage? Can you walk me through the steps involved to compute the reservation wage?

Optional Consumption/Leisure

I am having some trouble with a problem set and can use some help working out solutions John's preferences for consumption and leisure can be written as U(C, L) - (C- 200) * (L -80) There are 168 hours to split between consumption and leisure. John earns $5 per hr after taxes. John also gets $320 in welfare each week. Explain how to graph John's budget line and then graph it. What is John's Marginal Rate of Substitution when L=100 and he is on the budget line. What is John's reservation wage Fine John's optimal amount of consumption and Leisure.