1. Computing labor productivity and its relationship to the demandfor labor

Gopher Excavators produces shovels in a small factory and sells the shovels in a competitive market. The following table shows the company's production function:

LaborOutput(Number of workers)(Shovels)001902170324042905320

Use the blue points (circle symbol) to plot the production function for Gopher Excavators on the following graph.

Production Function

0

1

2

3

4

5

400

360

320

280

240

200

160

120

80

40

0

OUTPUT (Shovels)

LABOR (Number of workers)

Calculate the marginal product of labor (MPL) of each worker, and then plot the MPL curve on the following graph using the blue points (circle symbol).

Note: Remember to plot each point halfway between two integers. For example, when the number of workers increases from 0 to 1, the MPL of the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway between 0 and 1. Line segments will automatically connect the points.

MPL

0

1

2

3

4

5

100

90

80

70

60

50

40

30

20

10

0

MPL (Shovels per worker)

LABOR (Number of workers)

The following graph shows the demand for labor for three different prices per shovel:

0

1

2

3

4

5

300

270

240

210

180

150

120

90

60

30

0

WAGE (Dollars per worker)

LABOR (Number of workers)

M

O

N

Given the company's marginal product of labor curve shown on the second graph, line on this graph shows Gopher's demand for labor when the price of a shovel is $1.00, and line shows Gopher's demand for labor when the price of a shovel is $3.00.