XYZ Co operates in a competitive market. Its marginal product of labor is 1/L, and it takes the wage and price as given. Derive the firm's short-run demand for labor as a function of w and p. How much labor will the firm hire if w = 2 and p = 10?
What will be an ideal response?
Setting w = p ? MPL yields w = p/L or L = p/w. At w = 2 and p = 10, the firm hires
5 units of labor.
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Refer to the above figure. Profits for this firm are positive
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a. above the equilibrium price and below the demand curve. b. below the equilibrium price and below the supply curve. c. above the supply curve and below the demand curve. d. below the equilibrium price and above the supply curve. e. below the equilibrium price and above the demand curve.
Over the past 90 years or so, the inflation rate has
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