SopaMaru9803 SopaMaru9803

30-05-2023
Business

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Consider a firm that exists for one period. The value of labour's (L) marginal product is given by VMPL= P X MPL where P is the price of output, and MPL 10- 0.5L. The wage rate is $10. a. Assuming that there are no hiring or training costs. If the firm expects the price of the output to be $10, what is the optimal level of employment Lo? If the firm hires these workers, but then finds out that the price of output is $5, what will the firm do?

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