00:01
So here we're talking about the demand for labor, and we're given a production function, right? q is equal to 14l minus l squared.
00:09
The idea here is that the demand for labor should be based on the amount of value workers create.
00:28
If workers are creating tons of value, the firm should be willing to pay more than if the workers are creating.
00:36
No value.
00:36
So the way we start doing that is by getting what we call the marginal product of labor, which is the derivative of the production function with respect to labor, which is going to be 14 minus 2l, right? this gives you the number of units produced, right, from an additional worker, plus one worker.
00:58
So to get the value of what the workers produced, we multiply by the price, right? so the price here looks like it's 10.
01:08
So the price times the marginal product of labor is going to be 140 minus 20l.
01:15
And this is the dollar produced from plus one worker...