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Unformatted text preview: and the marginal product of labor (MPL). Clearly label all axes and the point, p* at which diminishing marginal returns to labor set in. [2 points] 2 Name (Last, First): SID: 3. Consider that each resident of Chalfinia needs an amount of food, s to survive. If the wage falls below s, residents of the island will die. Assuming that there are no taxes or transfers, provide a condition (or equality or equation) that characterizes the maximum possible population size in Chalfinia. [2 points] 4. Thinking about the standard population size ­land use model in lecture, name a condition under which slavery is most likely to develop. [1 point] a. s = MPL b. s = APL c. APL = MPL d. Between s = MPL and s = APL 5. Temporarily, the island’s population becomes large enough such that the market wage falls below the subsistence level. Rather than see the population shrink, the municipal government of Chalfinia enacts a tax (τ) on landowners such that some of the profits accruing to landowners are redistributed to workers. Using MPL, s, the number of workers (n) and the number of landowners (L), write an equation for the minimum size of the tax that each landowner must pay to ensure the survival of all workers. [3 points] 6. Name an equality that gives the population size where surplus per worker is maximized. Will the island’s total surplus be maximized at the same population size as the island’s surplus per worker? Briefly explain your answer. [3 points] 3 Name (Last, First): SID: 7. More time has passed and Chalfinia has declared independence from Ellicott. The national government of Chalfinia is now charged with creating a military. A proposal has been put forth by the new country’s economists: [4 points] PROPOSAL A: In order to provide the manpower needed for our military, we should encourage greater immigration. The immigrants can either be recruited directly into our armed services or can replace current residents of our new country who leave the civilian workforce and join the military. This policy can increase the size of the military without affecting our ability to purchase weapons out of our surplus. A...
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