Suppose a perfectly competitive labour market in equilibrium. The price for each unit of output produced and sold by firms is po Because of the pandemic, employees in this labour market feel demotivated and, consequently, firms experience of decrease in the marginal product of labour. Starting from the initial equilibrium (Lo, wo) associated with the price po, the employees’ demotivation triggers…
a. A shift of the demand for labour to the right
b. A shift of the demand for labour to the left
c. A shift of the supply for labour to the right
d. A shift of the supply for labour to the left
Suppose a perfectly competitive labour market with an inverse demand w=50-2L and an inverse supply w=3L. w and L denote the wage for labour and the quantity of labour, respectively. Determine the market equilibrium wage w*
A firm uses labour as its only variable input. Its daily production function is Q=5L1/2 with Q and L representing the quantity of output and labour, respectively. The price per unit of output is p=12 and the daily equilibrium wage in a perfectly competitive labour market is W =10. Determine the amount of labourl” the profit-maximizing firm should hire.