Suppose a firm needs to combine 3 units of machines with 7 units of labor to produce one unit of output. Now assume the firm has 18 machines. There is a sudden shock such that the wages of labor doubles in the market. (a) What is the short run elasticity of labor demand? (b) What other margins of adjustment does the firm have in the long run? Explain
Suppose a firm needs to combine 3 units of machines with 7 units of labor to produce one unit of output. Now assume the firm has 18 machines. There is a sudden shock such that the wages of labor doubles in the market. (a) What is the short run elasticity of labor demand? (b) What other margins of adjustment does the firm have in the long run? Explain
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter26: Factor Markets: With Emphasis On The Labor Market
Section: Chapter Questions
Problem 14QP
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Suppose a firm needs to combine 3 units of machines with 7 units of labor to produce one unit of output. Now assume the firm has 18 machines. There is a sudden shock such that the wages of labor doubles in the market.
(a) What is the short run
(b) What other margins of adjustment does the firm have in the long run? Explain
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