Question

Bigfoot Corp. manufactures shoes in the small town of Here. It is the only employer in town, and Here is too far from anywhere else for townspeople to work elsewhere. Men and women are equally productive; they each produce two pairs of shoes a day, which Bigfoot sells in the perfectly competitive shoe market at a price of $20 per pair. The labor supply curves of men and women respectively are given by

Lm=25wm-250 Lw=50ww-1000

Where wm and ww represent men’s and women’s wage rates.

(a) How many men and how many women will Bigfoot employ, and what wage rates will it pay them, if it wishes to maximize profits?

(b) What would be the socially efficient employment levels and wage rates?

Answer 1

Quantitive and qualitative Part:

Cost Benefit Analysis :The company needs to anlayze the cost benefit analysis for moving out its business to India.

Govenrment Policy: The company needs to check the Indian govt policy with respect to setting up a call center in india whether is there any tax exemption or restriction on such business or not.

Tax Rate: The company needs to check the tax rate of India and the same should be comparable with the tax rate of samall town.

Corporate Social Responsibilty (CSR): Before moving its business to India, company should consider on the CSR activity as the only 10% of the people in the town was employee and if the company moves its business than the unemploynment rate would be increase.