Suppose the marginal product of labor is MPN = 200

Question

Suppose the marginal product of labor is MPN = 200 - 0.5N
Where N is aggregate employment.The aggregate quantity of labor supplied is 100 + 4w,where w is the real wage.The government imposes a minimum wage of 60.What is the quantity of employment?

Quizplus · Accepted Answer

To find the equilibrium quantity of employment, we need to set the marginal product of labor equal to the real wage. 
Thus, 200 - 0.5N = w = 60. 
Solving for N, we get: 
N = (200 - 60)/0.5 = 280. 
Therefore, the equilibrium quantity of employment is 280. Therefore, the best choice is option C.