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Question 2 . If a monopolist uses L workers to produce q units of output, its profit is given by ( q , L )
Question If a monopolist uses workers to produce units of output, its profit is
given by
where are positive constants and is the wage rate.
a Interpret this equation.
b Assume a production function Using the method of Lagrange multipliers, find
the firms' optimal employment choice How does employment change as productivity
increases. Why does the sign depend on
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