C suppose w 15 draw this on you graph in part b and

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labor on a graph. c. Suppose W = $15. Draw this on you graph in part (b) and label the equilibrium. d. Find the profit- maximizing quantity of labor. e. Suppose the wage increases to $20. Draw this change on your graph in part (b) and label the new equilibrium. f. Does the profit maximizing quantity of labor decrease, stay the same, or increase? Why? g. What is the new profit-maximizing quantity of labor? 2. Consider the scenario in question (1) again when W = $15. (Please re- draw this initial equilibrium on a new graph.) Suppose that due to a new employee training program, the marginal product of labor increases by 4 at all levels of employment so now we have: MP, = 20 - L+4 = 24 - L a. What is the new marginal revenue product of labor? b. Draw the firm's new demand for labor on your graph. c. Does the profit- maximizing quantity of labor decrease, stay the same, or increase? Why? d. What is the new profit maximizing quantity of labor? Chapter 4 1. Suppose the following is true about Edna's utility: u = 10c0.5 20.5 a. Calculate her utility if she consumes c = $49 and enjoys l = 12.25 hours of leisure. b. If she increases leisure to l = 16 hours, how much does she need to consume in order to maintain her level of utility in part (a)? c. If she decreases her leisure to l = 9 hours, how much does she need to consume in order to maintain her level of utility in part (a)? d. Draw her indifference curve on a graph. e. What is her marginal utility of consumption when she consumesc = $49 and enjoys f = 12.25 hours of leisure? f.
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What is her marginal utility of leisure at this point? g. What is her marginal rate of substitution at this point? Provide an interpretation for your answer. h. If Edna's wealth is $2 and the wage is W = $4, what is her budget constraint? i. Draw her budget constraint on your graph in part (d). j. Show that c = $49 and l = 12.25 is feasible given her budget constraint. k. Given this budget constraint, is c = $49 and l = 12.25 Edna's optimal combination of consumption and leisure? Why or why not?
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