I am trying to model the profit maximization decision of a firm that uses two types of labor, workers A and workers B. I started by drawing the marginal product and marginal cost curves (lines, for simplicity) for each type and found, that the lines for category A are almost horizontal, whilst when the number of workers of type B increases, the marginal product (which is high at the beginning) sharply goes down and the cost per worker goes up. Is there a way to combine these findings in a simple model that explains how a firm chooses the optimal mix of workers?

  • $\begingroup$ I'm not sure what you are asking here. It is unclear to me what should be an assumption and what a finding. $\endgroup$ Commented Nov 6, 2023 at 0:07
  • $\begingroup$ @Michael Greinecker: I am looking for a way to model the firm's hiring decisions. There are 2 groups of workers, which differ in their productivity and cost. What would the profit optimization strategy be? $\endgroup$
    – Mikhail
    Commented Nov 6, 2023 at 0:40


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