Please be detailed in your explanation.

Distortions Question 1: Expanding the Span of Control Consider the undistorted model with a continuum of firms i E [0,1] where Y, = AL" and the labor supply (and the number of firms) is endogenously determined by free entry into entrepreneurship. The parameter o represents the "span of control" of the manager of the firm (how many workers a manager can manage effectively). Suppose you created a new piece of software that helped entrepreneurs manager their workers, causing an infinitesimal increase in o. a. Calculate the impact on the number of firms in the economy. Would the number of firms increase or decrease? Hint: Infinitesimal increase = partial derivative b. What is the intuition for your answer to part a