Critical to the construction of some models of macro poverty traps is the assumption that the…

By Client

}

May 15, 2022

complete

Place your order today at 15% discount

Critical to the construction of some models of macro poverty traps is the assumption that the profitability of setting up a modern, high-productivity establishment in any one sector depends positively on the size of the market the establishment will face (which in turn is taken to depend positively on the number of other sectors in which modern, high-productivity establishments have set up). In this problem you will examine a very simple technology for modern production, involving a fixed cost of setup, in which profitability of setting up indeed depends positively on the number of
Critical to the construction of some models of macro poverty traps is the assumption that the profitability of setting up a modern, high-productivity establishment in any one sector depends positively on the size of the market the establishment will face (which in turn is taken to depend positively on the number of other sectors in which modern, high-productivity establishments have set up). In this problem you will examine a very simple technology for modern production, involving a fixed cost of setup, in which profitability of setting up indeed depends positively on the number of units of output the firm anticipates being able to sell. Suppose that modern production can take place only after incurring a fixed cost of F units of labor. Once that cost is incurred, each unit of additional labor produces _1 units of output. The price of a unit of labor is 1. Suppose the price of a unit of output is 1 also. Let Q be the quantity of output the potential investor anticipates selling. a. Derive an expression for the producers profits (i.e., revenue minus labor costs) as a function of Q, F, and _. b. Making use of this expression, show that if F = 0 (meaning that there are no fixed costs) then setting up is profitable regardless of the level of Q. c. Now assume F0. Derive an expression for the minimum level of Q at which production is profitable. How does this minimum profitable scale change as F increases? As _ increases?

Need help with your Assignment?

Hire professional just from $9.99

Get your assignments done 100% Original, Plagiarism Free, Customized to your instructions!

How it works

1. CLICK on the ORDER NOW button.

2. Paste your instructins in the instructions box. You can also attach an instructions file.

3. Select the writer category, deadline, education level and review the instructions.

4. Make a payment for the order to be assignment to a writer.

5. Download the paper after the writer uploads it.

Will the writer plagiarize my essay?

You will get a plagiarism-free paper and you can get an originality report upon request.

 

Is this service safe?

All the personal information is confidential and we have 100% safe payment methods. We also guarantee good grades.

Read More

Related Posts

It’s Your First Order?

We’ll give you a discount! You get 15% off the full price. Enjoy!

Chat Now
1
Powered by Studywix
Hello! Welcome to to our whatapp support.
We offer READY solutions, HIGH QUALITY PLAGIARISM FREE essays and term-papers.

We are online and ready to help.