Plot the marginal product of labor function. If the price of output (P) is $50 and the money wage (W) is $250, what are the profit maximizing levels of employment and output in the economy. Also, assuming the economy is in a long run equilibrium, show the fraction of total output earned by labor and the fraction of total output earned by capital. Explain why, in the long run, firms make zero economic profits in this economy.
Plot the marginal product of labor function. If the price of output (P) is $50 and the money wage (W) is $250, what are the profit maximizing levels…
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