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(Challenging) Draw a Firm's Labour Demand Curve That Intersects the Vertical

question 88

Essay

(Challenging) Draw a firm's labour demand curve that intersects the vertical axis at $20 per hour, and choose a point on the curve corresponding to an hourly wage of $12 and employment of 50 workers.
a.Explain the significance of the labour demand curve and show why such a curve is downward sloping.
b.At the employment level of 50 workers, what is the total amount the employer pays in wages?
c.At the employment level of 50 workers, what is the firm's profit? (Hint: at each level of employment, the labour demand curve shows the maximum wage the firm is willing to pay an extra worker.).


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