Top Posters
Since Sunday
g
3
3
2
J
2
p
2
m
2
h
2
s
2
r
2
d
2
l
2
a
2
Home Q & A Board Other Fields Homework Help Business Economics
New Topic  
PaulKet PaulKet
wrote...
Go to Answer
Posts: 488
Rep: 6 0
6 years ago
Jon runs a bar in New York City. A city law prevents smoking in New York bars, but Jon is able to convince a friend in city hall to grant his bar a smoking permit by exploiting some fancy loopholes in the law. While smoking enables Jon to charge a premium to the customers (higher drink prices), his workers are subject to second-hand smoke. Therefore Jon has to pay his workers a wage higher than he otherwise would. Assuming Jon's production function is
f(L,K) = LαK1-α, where L is the quantity of workers and K is the quantity of capital, how does Jon's optimal capital-to-labor ratio compare to similar bars without smoking?
Textbook 
Microeconomics: Theory and Applications with Calculus

Microeconomics: Theory and Applications with Calculus


Edition: 4th
Author:
Read 98 times
2 Replies
The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.
Replies
Answer verified by a subject expert
forrestforrest
wrote...
#1
Posts: 266
Rep: 3 0
6 years ago
Sign in or Sign up in seconds to unlock everything for free
More solutions for this book are available here
1

Related Topics

PaulKet Author
wrote...
#2
5 years ago
A Plus Slight Smile
The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  711 People Browsing
 125 Signed Up Today
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Live Chat
Related Images
  
 212
  
 268
  
 500
Your Opinion
Which industry do you think artificial intelligence (AI) will impact the most?
Votes: 352
Previous poll results: Who will win the 2024 president election?