Homework 3 - Karina Santana May 5, 2010 Homework # 3/...

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Karina Santana May 5, 2010 Homework # 3/ Chapter 20- Problem 9 In this chapter we learn that it is possible to maximize profits by hiring less workers. This is possible because an extra worker does not necessarily mean that more goods and services will be produced. This is the case because if we were to look at the Marginal product labor, we notice that each additional worker produces less good than the one before. Since this is the case we would be correct to say that a lot of workers are not needed to produce more money. In order for this to be true we come across the problem of Kendra, who wants to maximize her profits by removing some labor, increasing her capital and using the current land that she has. If Kendra can Supposedly maximize her profits by employing less labor and more capital than she is currently using the same amount of land then she has to follow three conditions in order for this to be true. One of the conditions is that Kendra chooses a level of employment at which the marginal product of labor is equal to the
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Homework 3 - Karina Santana May 5, 2010 Homework # 3/...

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