The local Law Firm Guild has observed that the Bureau of Labor Statistics projects that employment of paralegals
over the next decade will rise considerably faster than the employment of lawyers (https://www.bls.gov/emp/ep_table_107.htm), which it assumes will push paralegal wages down to $21.50 due to their high supply. Further, your analysis of the larger pool of paralegals suggests some increase of their productivity, and that paralegals will soon be able to write on average three briefs per hour. If the other values remain the same (attorney wage and writing speed, need for sixty briefs per hour), would the company save money in the writing of the sixty legal briefs by hiring six paralegals and firing some attorneys?
a. No. The paralegals are now producing a higher marginal product per dollar than they were before, and with the higher wage it is more expensive to use them than using only attorneys.
b. Yes. The four paralegals lead to a minimization of marginal product per dollar, which is preferred by the company.
c. No. The higher productivity of the attorneys is the only relevant factor and since the paralegal marginal product is still only half that of attorneys, they should not be hired. The increased paralegal wage only magnifies the fact that using them would be more costly than using only attorneys.
d. Yes. The increased productivity (even with the higher wage) resus in the marginal product per dollar of paralegals being above the marginal product per dollar of lawyers. The cost of using only lawyers is now more expensive than using six paralegals and seven lawyers.