- +44 141 628 6080
- [email protected]

Suppose that tahers pizza business operates under

Suppose that Taher's pizza business operates under competitive conditions and that his short-run production function is q=20^E .

a) How much labor does he employ if the price of each pizza is p = $12 and the hourly wage is w0 = $6? [Hint: In this case, it can be shown that the marginal product of labor is MPE = 10/ square root E]

b) What happens to the quantity of labor he demands if the wage increases to w1 = $12?

c) Once again assume w = $6 but suppose the government imposes a tax of 25% on each dollar he pays his workers, to cover their health insurance costs (called a payroll tax). Ceteris paribus, what happens to his employment level?

d) Suppose the conditions set out in (a) hold. All else equal, what happens if the government imposes a 25% tax on his profits?

e) What do you conclude from your answers to (c) and (d)?

Expected delivery within 24 Hours

1934863

Questions

Asked

3,689

Active Tutors

1434910

Questions

Answered

**
Start Excelling in your courses, Ask a tutor for help and get answers for your problems !! **

Â©TutorsGlobe All rights reserved 2022-2023.

## Q : Suppose demand is still described by p510-080q and supply

suppose demand is still described by p510-080q and supply is described by p190020q if there are no price controls what