What happens to quantity of labor demanded and to production

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Monster Conglomerate Inc . (MCI ) manufactures paper clips for the Pentagon. At its current capital stock it produces paper clips with t he production function: y = 8.5L - 0.5 L² where L is the number of workers employed. a) Find the MP L . b) MC I gets $5 from the Pentagon for each paper clip. How many workers will they hire if the wage is $38? What if it’s $22? c) Gra ph the relation between MCI ’ s labor demand and the nominal wage. How does this graph differ from a labor demand cure ? Graph the labor demand curve. d) With the nominal wage fixed at $38, the price of paper clips rise s to $10 from $5. What happens to MC Inc.’s labor demand and production? e) With the nominal wage fixed at $38 and the price of paper clips fixed at $5, the introduction of a new production technology doubles the number of paper clips that can be produced by any given number of workers. What happens to the quantity of labor demanded and to production? f) What is the relationship between your answers to (d ) and to (f)?

Reference no: EM131244362

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