1. # Workers QMPMRP (P = $2) 00 115 30 2291428 3401122 445510 54948 65124 a. DMP begins b. Profit max hire how many? Wage = $6 c. Profit max produce how many d. Fixed cost $25, Hire 3, Profit or Loss? TC = FC ($25) + VC ($6 x 3 = $18) TC = $43 TR = Q40 x P $2 = $80 TR – TC $80 - $43 = Profit +$37 e. Willing to pay 6 th worker? $4

2. 4. Assume that “widgets” and “gadgets” are normally used together but are produced and sold separately. The price of gadgets has recently increased. How will this affect the market for workers who produce “widgets”? If P of gadgets goes up (P of a complimentary good) = D for widgets goes down = P for widgets goes down = D for labor for widgets shifts left Wage for labor for widgets goes down

3. # Workers QMPMRP (P = $2) MRP (P = $1) 00 115 3015 229142814 340112211 4455105 549484 651242 5. a. Price widges falls to $1 = ? D for labor shifts left b. Wage = $6, how many workers to hire? 6. New machines = labor market? Increase MP of workers = increase MRP = D shifts right = wages rise