LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 3, Problem 8P
To determine
Find the firms’ short-run elasticity of labor demand.
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A firm’s technology requires it to combine 5 person-hours of labor with 3 machinehours to produce 1 unit of output. The firm has 15 machines in place and the wage rate rises from $10 per hour to $20 per hour. What is the firm’s short-run elasticity of labor demand?
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