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There is a firm that produces using the production function Y=A N - N2, where Y...

There is a firm that produces using the production function Y=A N - N2, where Y is output, A is productivity, and N is employment. Firms hire workers until the marginal product of labor is equal to the wage rate, w. The supply of labor is Ns=0.5 w. Starting from A=2, the economy is hit by a negative productivity shock that decreases A by 2% (A changes from 2 to 1.96). What is the percentage change in employment induced by the change in A?

A. -2%

B. -1%

C. 1%

D. 2%

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