The Effort of a Firm's Workers Depends on Their Real

Essay

The effort of a firm's workers depends on their real wage according to the following schedule:
$$\begin{array} { c c } \text { Real wage } & \text { Effort } ( E ) \\\hline 16 & 10 \\17 & 13 \\18 & 18 \\19 & 22 \\20 & 25 \\21 & 26\end{array}$$
The marginal product of labour is MPN = E(400 - 4N)/30.
a.What is the efficiency wage?
b.How many workers will the firm hire?
c.Suppose an adverse productivity shock reduces the marginal product of labour to ?MPN = E(360 - 4N)/30.How would your answers to parts (a)and (b)change?