The marginal product of labor (measured in units of output)for Relient Corp.is given by MPN = A(200 - 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 $30?
A)170
B)185
C)190
D)195

Question

Quizplus · Accepted Answer

The demand for labor is determined by setting the value of the marginal product of labor equal to the nominal wage. The value of the marginal product of labor (VMPL) is given by the price of output times the marginal product of labor, which is $3 * 2(200 - N) = $6(200 - N). Setting this equal to the nominal wage of $30 and solving for N gives the demand for labor. $6(200 - N) = $30, simplifying to 1200 - 6N = 30, then 1170 = 6N, and finally N = 195.

The Marginal Product of Labor (Measured in Units of Output)for