Question

1. Find the following for Altria (a tobacco company, use Google and explain how you achieved these results):

a) The labor demand function for the firm.

b) The best response function.

Answer 1

A). Altria is leading tobacco producer within the US .The firm has extensive tobacco firms creating a need for employees to tend to the farms .

Explanation:

It grows 70% of the tobacco it uses while the rest is imported from various other nations .

There is a huge demand for worker at the firm to meet its production prospects. The quantity of labor demanded is affected majorly by the workers conditions of work , ie , wages and equipment's for use .A higher wage value will attract more workers while a lower wage value will discourage workers interest in the firm .

Altria must also ensure profitability in production .The workers employed should produce enough output to meet the production capacity .Therefore , the labor demand for the firm is directly proportional to the production capacity .

b) The firm should respond to changing labor market trends by creating a good work environment for the workers , i.e. ; excellent benefits and compensation , proper gear for work , enhanced opportunities for advancement as well as good health benefits .Such efforts will increase the demand for people to work for the firm .