W4P2 - Labour Demand and Supply

Question 1

How is the labour demand schedule derived?

Answer 1

we start by looking at the production function which is a function of labour only, as we keep capital constant

Graphically, the production function is concave and shows diminishing returns to labour i.e. each additional
unit of labour employed adds less to output than the previous one, the marginal product of labour MPL is downward sloping