The marginal product of labor measured in units of output

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The marginal product of labor (measured in units of output) for a certain firm is given by MPN = 309 - 2N. N is the labor.

a. What is the profit maximizing condition for the firm when choosing the optimal level of labor? Write down the condition in REAL terms.

b. Using the above information, obtain the ND curve.

c. Suppose the Labor Supply Curve is given by Ns = 92 + 12w. (w is the real wage). Obtain the Equilibrium real wage and the equilibrium labor (i.e. Ns=Nd=N).

d. Suppose that there is an adverse oil supply shock. Show the impact that this has on the production function, the labor market (i.e. on equilibrium wage and labor), and on the actual amount of output. SHOW a diagram and DISCUSS your findings.

Reference no: EM13378408

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