The marginal product of labor for a certain firm is given by the following function MPN =A(502N)

where A is productivity and N is the total number of labor hours used in production. The price of output is $2 per unit.

(a) Assume that A = 0.5. What is the demand for labor if the nominal wage is $10?

(b) What if it is $20?

(c) Graph the demand curve for labor.

(d) If the firm optimally chooses to employ N = 10, what does that tell you about the value of the prevailing real wage?

(e) Repeat (a)-(d) if A = 1.5.