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 For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter11: Labor Markets

Section: Chapter Questions

Problem 1SQ

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