LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 5, Problem 7P
(a)
To determine
Determine the compensating differential between two firms.
(b)
To determine
Explain the given statement.
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Your software company recently instituted a highly regarded training program for newly hired software developers. The benefits of this program include not only the benefits to employees, but also the goodwill generated by an increase in your reputation among customers and professional groups. The costs of this training program include all of the labor, space, and consultants necessary. Suppose these benefits and costs are givenby B(Q) = 100Q − 2Q2 and C(Q) = 10Q, where Q represents the amount of hours each software developer should spend in training. (Note that MB = 100 − 4Q, MC = 10, and also that time can be measured in fractions of one hour.)
a. What level of Q maximizes the total benefits of your newly introduced training program?b. What level of Q minimizes the total costs of the program?c. What level of Q maximizes the net benefits?
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