AECO 301 Intermediate Macroeconomics Spring 2010Instructor: Yangyi ShanReminder: final exam schedule: Monday May 10 – 1pm-3pm in LC 2.Homework Assignment 6Due Day: May 04, 2010 at the beginning of lectureInstructions:•Please write your name, student ID on the first page.•Please show your work.•Please put your answers in the order of the questions •Please staple your homework1. (20 points) A firm believes that the relationship between the real wage it pays and the effort exerted by its workers is given by the following table.Real Wage Effort (E)1020112412271329The marginal product of labor for this firm is given by MPN = E(100 - N)/9, where E is the effort level and N is the marginal product of labor. (a.) If the firm can pay only one of the 4 real wage levels shown in the table, what real wage will it pay? How many workers will it employ?(b) Suppose that a big influx of workers enters the town, willing to work at a real wage of 10. How would that change your answer above?
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