A profit maximizing firm use two types of labor in production: skilled (N.) and unskilled (N)....

 

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A profit maximizing firm use two types of labor in production: skilled (N.) and unskilled (N₁). The production function is given by 9 Y = 400(N + N₂) — ²N² – 1⁄N². - Assume P 1 (a) Explain how the firm will hire from the two labor markets. (b) If the supply of unskilled and skilled labor are given by Nu = 40 + wu and N = 25+ Ws solve for the equilibrium values of w, and w, and the employment levels for each type of labor. (c) The government establishes a training program aimed at increasing the supply of skilled labor. Specifically, after training, the supply of unskilled and skilled labor are given by Nu = 25+ W and N = 40 + w.. How will this affect the inequality in wages, the employment levels and the output of the firm? A profit maximizing firm use two types of labor in production: skilled (N.) and unskilled (N₁). The production function is given by 9 Y = 400(N + N₂) — ²N² – 1⁄N². - Assume P 1 (a) Explain how the firm will hire from the two labor markets. (b) If the supply of unskilled and skilled labor are given by Nu = 40 + wu and N = 25+ Ws solve for the equilibrium values of w, and w, and the employment levels for each type of labor. (c) The government establishes a training program aimed at increasing the supply of skilled labor. Specifically, after training, the supply of unskilled and skilled labor are given by Nu = 25+ W and N = 40 + w.. How will this affect the inequality in wages, the employment levels and the output of the firm?