Short run profit maximization condition

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Reference no: EM1315632

1. Describe (in a sentence or two) the short run profit maximization condition when labour is the only variable input? What will happen to the labour demand if price of the output goes up?

2. What happens to employment in a competitive firm that experiences a technology shock such that at every level of employment its output is 200 units/hour greater than before?

(Hint: Think what will happen to the marginal productivity as a result of the technology shock.... You may want to use Table 4-1 to help you think about this problem.)

Reference no: EM1315632

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