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8 January, 07:45

The marginal product of labor (measured in units of output) for Expando Corp. is given by MPN = A (400 - N) where A measures productivity and N is the number of labor hours used in production. Suppose the price of output is $3 per unit and A = 2.0. What will be the demand for labor if the nominal wage is $18? 107 197 57 397

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  1. 8 January, 11:38
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    397 hours

    Explanation:

    The computation of demand of labor is given below:-

    The full form of MPL is Marginal revenue product of labor which equals to

    = Marginal revenue * Marginal product labor

    Given that

    MPN = A * (400 - N)

    So,

    Marginal product labor = 3*A * (400-N)

    Marginal product labor = $18

    So,

    3*A * (400-N) = $18

    3*2 * (400-L) = $18

    N = 400-3

    = 397 hours

    So, the number of labor will be demanded 397 hours
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