Question
Say that country A's MP L = -L + 11 and country B's MP L = 2L + 5. What would be the optimal amount
Say that country A's MPL = -L + 11 and country B's MPL = 2L + 5. What would be the optimal amount of L? Note: country B's MPLis written in terms of the coordinates of country A.
a. Does the MPL for both countries graph as you would expect?
b. What is the optimal amount of labor?
c. Say that country A originally had 1 unit of labor and country B had the rest. Then, migration is allowed. By how much does welfare improve?
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Managerial Economics and Business Strategy
Authors: Michael R. baye
7th Edition
978-0073375960, 71267441, 73375969, 978-0071267441
