The marginal product of labour (measured in units of output) for a certain firm is
MPN = A(100 - N),
where A measures productivity and N is the number of labour hours used in production. The price of output is $2 per unit.
a. If A = 1.0, what will be the demand for labour if the nominal wage is $10? if it is $20? Graph the demand curve for labour. What is the equilibrium real wage if the supply of labour is fixed at 95?
b. Repeat part (a) for A = 2.0.