Figure 1 Suppose that the firm has a minimum quantity of employment, N; that is, the firm can produce no output unless the labour input is greater than or equal to N*. Otherwise, the firm produces output according to the same production function as specified in Figure 1, ZF (K, N). The firm's marginal product of labour if there were no minimum quantity of employment is given in Figure 2. In Figure 1, Line 1 is parallel to wg N and is tangent to the production function at point A, and Line 2 is parallel to wcNd and tangent to the production function at point B. WgN Line 2 WC No Line 1 zF(K, N) Given that the firm has a minimum quantity of employment, N, the firm's demand curve for labour proceeds as follows: from w=0 to w=we, the demand curve from w=we to w=wc, the demand curve V from w=wc to w=wo, the above w=W8 demand curve from w=wo to w=wg, the demand curve Revenue, Variable Costs the demand curve B is vertical at Nd=N* is vertical at Nd = Nc exactly follows the path of MPN NA N Quantity of Labour No is vertical at Nd = 0 follows a curved path to the left of MPN Figure 2 follows a curved path to the right of MPN is vertical at Na = NA WB Real wage, WD Wc MPN WE No Quantity of Labour Figure 1 Suppose that the firm has a minimum quantity of employment, N; that is, the firm can produce no output unless the labour input is greater than or equal to N*. Otherwise, the firm produces output according to the same production function as specified in Figure 1, ZF (K, N). The firm's marginal product of labour if there were no minimum quantity of employment is given in Figure 2. In Figure 1, Line 1 is parallel to wg N and is tangent to the production function at point A, and Line 2 is parallel to wcNd and tangent to the production function at point B. WgN Line 2 WC No Line 1 zF(K, N) Given that the firm has a minimum quantity of employment, N, the firm's demand curve for labour proceeds as follows: from w=0 to w=we, the demand curve from w=we to w=wc, the demand curve V from w=wc to w=wo, the above w=W8 demand curve from w=wo to w=wg, the demand curve Revenue, Variable Costs the demand curve B is vertical at Nd=N* is vertical at Nd = Nc exactly follows the path of MPN NA N Quantity of Labour No is vertical at Nd = 0 follows a curved path to the left of MPN Figure 2 follows a curved path to the right of MPN is vertical at Na = NA WB Real wage, WD Wc MPN WE No Quantity of Labour