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15 August, 04:33

The production function in an economy is: Y = 2 (5.00Nminus0.0025Nsquared ), where the marginal product of labor is given by: MPN = 2 (5.00minus0.0050N ). The equation for the labor supply curve is: NS = 55.0 + 10 (1minust ) w , where NS is the amount of labor supplied, w is the real wage and t is the tax rate on wage income. The tax rate is t = 0.50. Determine the labor demand function. (Enter your responses rounded to two decimal places) : ND = nothingminus nothingw.

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  1. 15 August, 04:43
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    The labor demand function would be ND=1000-100w

    Explanation:

    According to the given data we have the following:

    Real wage = MPN

    MPN=2 (5-0.0050N)

    Real wage=w

    So, using the equation, w=MPN we determine the labor demand function as follows:

    w=2 (5-0.0050 N)

    w=10-0.01 N

    0.01 N=10-W

    N=10-w/0.01

    N=1000-100w

    Therefore the labor demand function would be ND=1000-100w
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