Curriculum: Labor demand with asymmetric linear adjustment costs in a deterministic environment

Here`s the video mentioned in today's lecture that goes through the figure showing labor demand with asymmetric, linear adjustment costs in a deterministic environment.

Note that this is in a deterministic environment - that is: The firm thinks that "wages, productivity, product price and everything else will be the same from now and forever." The figure shows how it reacts if something happens to one of these factors (or mass quitting by workers) and the firm keeps on believing that the future will hold no further changes. If a firm faces changing conditions, on the other hand, such as business cycles, it may pay to aim for smaller adjustments then this: You don`t fire everyone you lose money on in a downturn, because you know you would then need to incur hiring costs to increase the labor stock again when demand picks up again.