A Firm Employs M Workers Per Week and the Length

question 15

Essay

A firm employs M workers per week and the length of the workweek at the firm is H hours.Let MP_M be the added output from an additional employee and let MP_H be the added output from a one hour increase in the workweek at the firm.MEM and ME_H are,respectively,the marginal expense of an added worker and of an added hour of work.At present,the cost of an added unit of output produced by hiring more workers is $5 while the cost of an added unit of output produced by employing existing workers for more hours is $3.Is the firm maximizing profits given its current employment level and workweek? If your answer is yes,explain why.If your answer is no,explain why not and discuss what adjustments the firm should make.

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