Suppose in a small community workers can find employment in two industries: Clothing and Steel. In the Clothing industry, the marginal product of labor is always 1. In the Steel industry, the marginal product of labor is 12LS.5 -2, where LS is the total number of workers employed in the Steel sector. The total supply of labor in this community is fixed at LC +LS =25, and the output price is 1 for both Clothing and Steel. a)Suppose that the labor market is perfectly competitive. How many workers will be employed in the Clothing sector, and how many in the Steel sector? b)What wage rate will workers in each sector receive?
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