2. (20 points) Answer each of the following questions related to demand and supply of labor. Where appropriate, draw and

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2 20 Points Answer Each Of The Following Questions Related To Demand And Supply Of Labor Where Appropriate Draw And 1 (303.51 KiB) Viewed 58 times

2. (20 points) Answer each of the following questions related to demand and supply of labor. Where appropriate, draw and label the curves in question. (a) In what way is demand for factors of production different from demand for goods/services? (3 points) (b) The table below shows data for a competitive firm. L is labor, Q is output, P is price, W is wages, MPL is marginal product of labor and VMPL is the value of the marginal product of labor. Complete the table by filling out the blanks (Hint: Show your work for full credit] (3 points) L Q MPL Р VMPL Marginal Profit W 0 0 50 1 10 10 50 2 18 10 50 3 24 10 50 4 28 10 50 (i) Is the trend of MPL increasing, decreasing or constant? What property describes the trend of MPL? (4 points) (ii) How many workers should the firm hire to maximize profits? (3 points) (iii) Derive (draw) the firm's labor demand curve from the data (Hint: Clearly state the variable(s) you are using to derive the labor demand curve] (3 points) (c) Explain why for some individuals the labor supply curve may be back-ward bending. [Hint: The explanation should be accompanied by an appropriate graph] (4 points)