Name: ______________________________________________________________Labor MarketsHomework – Week 12Name: ______________________________________________________________Labor Markets1) Suppose that labor is the only input used by a perfectly competitive firm. The firm’s production function is as follows.Days of Labor Units of Output Marginal Product ofLaborValue of MarginalProduct of Labor0 01 72 133 184 225 256 277 28A) Calculate the marginal product for each additional worker (write it in the corresponding column in the table above).B) Draw this firm’s production function. What is the name of the process by which the production function flattens as number of inputs increases?C) Each unit of output sells for $10. Calculate the value of the marginal of the marginal product of each worker (write it in the corresponding column in the table above).D) Compute the labor demand showing the number of workers hired for all wages from $10 to $70 a day (assume each worker can only work 1 day).E) Draw the firm’s labor demand curve. F) What happens to this demand curve if the price of output rises from $10 to $12 per unit?2) Show the effect of each of the following events on the market for labor in the computer manufacturing industry. Begin by drawing a labor supply and demand and show the initial equilibrium. Then indicate how would the event affect the market, and how would the new equilibrium look. Draw the new equilibrium in your initial graph.A) Congress buys personal computers for all U.S. college students.B) More college students major in engineering and computer science.C) Computer firms build new manufacturing plants.3) For each of the following questions, circle the correct answer.A) If firms are competitive and profit-maximizing, the demand curve for labor is determined bya) The opportunity cost of worker’s time.b) The value of the marginal product of labor.c) Offsetting income and substitution effects.d) The value of the marginal product of capital.B)A bakery operating in competitive markets sells its output for $20 per cake and hires labor at $10 per hour. To maximize profit, it should hire labor until the marginal product of labor isa) ½ cake per hour.b) 2 cakes per hour.c) 10 cakes per hour.d) 15 cakes per hour.C) A technological advance that increases the marginal product of labor shifts the labor _____ curve to the _____.a) demand, leftb) demand, rightc) supply, leftd) supply,