You are asked to give an advice on employment related issues. Your

task is to analyse the effect of quasi-fixed labour costs on the demand for

labour. In the report that you prepare, you should cover the following

points.

a) Explain intuitively the impact of quasi-fixed labour costs on labour

market behaviour. Please mention some of the discounted present

value of the stream of wages and the stream of the values of mar-

ginal product is desirable.