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Consider the market for labor in the retail service industry. Below are the demand and supply conditions. The technology is such that labor produces output with the production function:
Q = -.25L2 + 175LMPL=-.5L+ 175
a. If the price obtained by selling output is $2, write and expression for the MRPL.
b. Suppose that workers can be hired competitively at a wage of $200. How many workers will they hire at this wage?
c. Now suppose that the retail industry is the sole employer. In this case, they face an upward sloping supply curve for labor given by w=L + 50 and the MEL=2L + 50. How many workers will they hire and what wage will the players be paid?
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