Question: Firm's problem ( i . e . maximize profits ) : m a x l , k p Q ( l , k ) -
Firm's problem ie maximize profits:
Which lead to the following equations:
Put another way,
price wage
price rental rate capital capital
Part A: One implication of this is that profit maximizing firms should set the marginal revenue product of labor equal to the wage rate. If men and women are equally productive MPL is the same is there an argument for a firm wanting to maximize its profit to pay women less? If the labor market is competitive, and female workers were paid less at a specific firm, would you expect them to look for other work and be hired by a different firm?
Part B: Suppose workers who have many years of experience have higher marginal products ie firms depend on them more to produce their product should profit maximizing firms pay them more?
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