. Combining this with your answer to parts

(e) and (f), explain why the following equation must hold:

Ps 5 w 1 d cgPs 1 11 2 g2 w*

1 2 d d . (24.11)

Derive from this the value of Ps as a function of

d, g, w,

e, and w*.

h. In order for the worker’s strategy in

(b) to be a best response to the firm’s strategy in (a), it must be that Pe $ Ps