Question Labour is a variable input into the production process. In this sense, a change in the amount of labour used in production (the number of employee hours) lead to a proportionate change in labour costs. However, some other labour-related costs may also occur. a) Define "quasi-fixed costs" and give three examples of them.

b) Assume a t-period of setting. Write down the mathematical expression that describes the profit-maximizing employment rule of a firm when there exist quasi-fixed costs. Explain what this expression means.

c) Consider a firm that only exists for one period. The value of labour's (L) marginal product is given by =, where P is the price of output, and = 100.5. The wage rate is $10. Assume that there are no hiring or training costs. If the firm expects the price of output to be $10, what is the optimal level of employment? If the firm hires these workers, but then finds out that the price of output is $5, what will the firm do?

Hint: If there is only one period, the number of periods becomes "1", and we do not need to discount future values into present values.

d) Assume now that there are hiring and training costs of $20 per worker. If the firm expects the price of output to be $10, what is the optimal level of employment? How does this compare to your answer in Part c)? If the firm hires these workers but then finds out that the price of output is $5, what will the firm do? What if the price is $2? Explain.

this is my third time asking this question 2 previous tutuors answered exactly same way which is not correct only part b was solved succefully rest were completed wrong they were more than 70% wrongly solved. below i will provide how other tutor solved.

a) Quasi-fixed costs refer to costs that are fixed or semi-fixed in the short run but become variable in the long run. These costs are incurred regardless of the level of output but do not change proportionately with changes in output. Three examples of quasi-fixed costs are:

Rent: Rent is a fixed cost that does not vary with output in the short run. However, if a firm needs to expand or downsize, the rent will become variable in the long run.

Salaries: The salaries of management and administrative staff are usually fixed in the short run but can become variable in the long run.

Equipment: The cost of purchasing or leasing equipment is fixed in the short run but can become variable in the long run.

b) In the presence of quasi-fixed costs, the profit-maximizing rule for employment is given by:

Marginal Revenue Product of Labor (MRPL) = Marginal Cost of Labor (MCL) + Quasi-Fixed Costs per worker

This means that the firm will hire workers until the value of their marginal revenue product (the additional revenue generated by each additional worker) equals the marginal cost of labor (the additional cost of hiring each additional worker) plus the quasi-fixed costs per worker.

c) The optimal level of employment can be found by setting the marginal revenue product of labor equal to the wage rate:

10 - 0.5L = 10

Solving for L, we get L = 0, which means that the firm should not hire any workers.

If the firm hires workers and later finds out that the price of output is $5, it will shut down because the marginal revenue product of labor will be less than the wage rate, and the firm will incur losses by producing.

d) When there are hiring and training costs, the profit-maximizing rule for employment becomes:

MRPL = MCL + Quasi-Fixed Costs per worker + Hiring and Training Costs per worker

Setting the MRPL equal to the total cost of hiring and training a worker, the optimal level of employment can be found by solving:

10 - 0.5L = 10 + 20

Solving for L, we get L = 0, which means that the firm should not hire any workers.

The optimal level of employment is the same as in part c) because the hiring and training costs are sunk costs that do not affect the marginal cost of labor.

If the firm hires workers and later finds out that the price of output is $5, it will compare the MRPL with the total cost of hiring and training a worker and decide whether to shut down or continue producing.

If the price of output is $2, the MRPL will be less than the total cost of hiring and training a worker, and the firm will shut down.