The marginal product of labor (measured in units of output) of a firm is given by MPN = A(2000 - N)
where A measures productivity and N is the number of labor hours used in production. Suppose the price of output is $6 per unit and A = 0.002.
(a) What will be the demand for labor if the nominal wage is $18?
(b) What will be the demand for labor if the nominal wage rises to $21?
(a) The real wage = $18/$6 = 3. Setting the real wage equal to the marginal product of labor gives 3 = 0.002(2000 - N), so 0.002N = 1, so N = 500.
(b) The real wage = $21/$6 = 3.5. Setting the real wage equal to the marginal product of labor gives 3.5 = 0.002(2000 - N), so 0.002N = 0.5, so N = 250.
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Developing countries with low saving rates and poor levels of health and education are likely to experience
A) low rates of growth in real GDP per capita. B) easy access to financial backing from banks. C) rapid growth in household incomes. D) high levels of foreign direct investment.
Which of the following statements describes a supply curve?
a. A supply curve is a graphic illustration of the relationship between supply, shown on the vertical axis, and demand, shown on the horizontal axis. b. A supply curve is a graphic illustration of the relationship between price, shown on the horizontal axis, and quantity, shown on the vertical axis. c. A supply curve shows the same information as a supply schedule. d. A supply curve shows the same information as a demand schedule.