A firm's markup μ per unit of output is given by μ = ((p - w/A)/p where p is the price of the output good, w is the nominal wage per hour, and X is the average productivity of labour (the number of output units per hour). The markup u is determined from the elasticity of the demand curve the firm faces: μ = 1/elasticity. Which of the following statements are correct? A higher elasticity leads to a lower real wage. Ap - w is the nominal profit per hour per worker. The real output per worker (X) is split into the firm's share Au and the worker's share w/p. The real wage is given by w/p = μ - λμ.

A firm's markup μ per unit of output is given by μ = ((p - w/A)/p where p is the price of the output good, w is the nominal wage per hour, and X is the average productivity of labour (the number of output units per hour). The markup u is determined from the elasticity of the demand curve the firm faces: μ = 1/elasticity. Which of the following statements are correct? A higher elasticity leads to a lower real wage. Ap - w is the nominal profit per hour per worker. The real output per worker (X) is split into the firm's share Au and the worker's share w/p. The real wage is given by w/p = μ - λμ.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.7P

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