The paper “ Freakonomics - A Rogue Economist Explores the Hidden Side of Everything” is a worthy variant of the assignment on macro & microeconomics. It is worthwhile noting that both income and leisure are consumer goods, which are the consumer desires to get more of each one of them. Significantly, if the efficacy function is in a way that extra income constantly elevates leisure’ s marginal utility, it will as well be depressing provided that income is not insignificantly negative. This means that provided that extra income has no effect in decreasing leisure’ s marginal utility to huge levels.
Consequently, one can define leisure as a normal good provided that the incomplete offshoot defined by one's attitude is negative. Conclusively, any good is said to be normal if its respective best consumption rises when the financial plan restraint shifts external wise with no changes in slope. Consequently, if one's attitude is positive, we conclude that leisure is a second-rate. Consequently, I do disagree with the above notion because it does not tally with the model of typical labor supply (Levitt, 2011). Q2. Assuming that capital refers to a typical input; the enlargement in the cost of capital raises the firm’ s marginal costs and will decrease the level of profit maximization output approximately 100 units.
Notably, the rise in the cost of capital furthermore squashes the isocost arc. Consequently, I do agree with the notion that the firm will use more workers and capital in the case that there is a decrease in the cost of capital. Q3. Where q is output; that is, value added and where one omits time subscripts to diminish notation. Notably, the term labor indicates the total workers in the process of the production process whereby one completely presume steady working hours for each year.
Consequently, the amount of workers and the sum of hours utilized in production are, in addition to a steady scale limit, the same. Significantly, the collective production utility as shown in the above equation points out that value added is determined by two inputs; that is, capital and labor. Considerably, one can simply extend the total inputs.
BibliographyLevitt, S. (2011). Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. Charlottesville, VA: HarperCollins.