# 经济代写|劳动经济学代写Labor Economics代考|ECON673

## 经济代写|劳动经济学代写Labor Economics代考|Labor Demand in the Long Run

To maximize profits in the long run, the firm must adjust both labor and capital so that the marginal revenue product of each equals its marginal expense. Using the definitions discussed earlier in this chapter, profit maximization requires that the following two equalities be satisfied:
$M P_L \cdot P=W$ (a restatement of equation 3.5) (3.7a)
$M P_K \cdot P=C$ (the profit-maximizing condition for capital) (3.7b)
Equations (3.7a) and (3.7b) can be rearranged to isolate $P$, so these two profit-maximizing conditions can also be expressed as
$P=W / M P_L$ (a rearrangement of equation 3.7a) (3.8a)
$P=C / M P_K$ (a rearrangement of equation $\left.3.7 \mathrm{~b}\right)(3.8 \mathrm{~b})$
Furthermore, because the right-hand sides of equations (3.8a) and (3.8b) equal the same quantity, $P$, profit maximization therefore requires that
$W / M P_L=C / M P_K(3.8 \mathrm{c})$
The economic meaning of equation (3.8c) is key to understanding how the ability to adjust capital affects the firm’s demand for labor. Consider the left-hand side of equation (3.8c): the numerator is the cost of a unit of labor, while the denominator is the extra output produced by an added unit of labor. Therefore, the ratio $W / M P_L$ turns out to be the added cost of producing an added unit of output when using labor to generate the increase in output. ${ }^6$ Analogously, the right-hand side is the marginal cost of producing an extra unit of output using capital. What equation (3.8c) suggests is that to maximize profits, the firm must adjust its labor and capital inputs so that the marginal cost of producing an added unit of output using labor is equal to the marginal cost of producing an added unit of output using capital. Why is this condition a requirement for maximizing profits?

## 经济代写|劳动经济学代写Labor Economics代考|More Than Two Inputs

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