Question
Please show all work. The right number(s) without work is worth zero points The marginal product of labor is given by: MPN = AK -
Please show all work.The right number(s) without work is worth zero points
The marginal product of labor is given by: MPN = AK - 2N.
(a) (5 points) Assume that A = 8 and K = 12. Suppose that the labor supply function for this economy is given by NS= 3 + w. Find the equilibrium real wage rate and the profit maximizing level of employment.
(b) (5 points) Suppose that A falls to 7 and labor supply is now given by: NS= 6 + w.
Find the new equilibrium real wage rate and the profit maximizing level of employment.
(c) (10 points) Explain exactly why the profit maximizing level of labor has changed.Be very specific with your answer as in using actual numbers.Begin your answer with:At the same level of labor input N*(from part a) the firm is no longer ...........
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started