Question 2. A firm's productivity is difficult to measure, but its employment is much easier. In this question we will use what we can observe, employment, and a model to back out what we cannot observe, productivity. Consider a domestic firm only serving in the domestic market (no exports or foreign affiliates). Answer the following questions. a) Write out a formula for the amount of production labor (( ) a firm with productivity 4 hires. Production labor means the labor needed to produce the good and does not include the labor used in fixed costs. Assume we know the values of following parameters: 61 = 3 , w1 = 1.2 , fP = 1 , E1 = 100 . A firm with productivity 4 hires: 1 ( 4 ) = b) Above table gives information about firm size distribution (in terms of employment) . Find the average firm size for each size bin. To do this, divide number of employees to number of firms for a given size bin. Firm Size Number of Firms Number of Employees 1 to 4 employees 2,810,033 5,612,254 5 to 9 employees 948,936 6,265,576 10 to 19 employees 611,926 8,242,749 Firm Size Number of Firms Number of Employees 20 to 49 employees 402,704 12,161,051 50 to 99 employees 124,334 8,533,853 100 to 249 employees 71,081 10,657,260 250 to 499 employees 21,488 7,491,988 500 employees or more 20,149 69,231,676 Firm 1 to 5 to 9 10 to 20 to 50 to 100 to 250 to 500 or Size 4 19 49 99 249 499 more Ave. Firm Size