1) Determine whether the factor cited in each scenario will make the demand for labor more or less elastic.

a.Labor costs are a relatively large share of the total cost ofproduction.

-more elastic demand

-less elastic demand

b.The firm's production process is capital intensive and requires extensive use of expensivemachinery.

-more elastic demand

-less elastic demand

c.The firm sells a product that has few substitutes and can therefore charge higher prices without losing too manycustomers.

-more elastic demand

-less elastic demand

d.The firm's production process exhibits a low degree of inputsubstitutability.

-more elastic demand

-less elastic demand

e.The firm can switch between using labor and capital relativelyeasily.

-more elastic demand

-less elastic demand

f.The firm's output exhibits elasticdemand.

-more elastic demand

-less elastic demand

2) The graph shows an individual labor supply curve. Use the graph to answer thequestions.

Under the Fair Labor Standands Act (FLSA), the US. Department of Labor imposes limits on the employment of minors, i.e., individuals under age 18. Consider how the reforms described would affect labor supply in the construction industry. a. Minors are required to take a year-long training course to be able to work in industries deemed hazardous, including construction. - b. Minors are now permitted to operate heavy machinery such as bulldozers. . c. Minors who graduate with a 3.5 GPA or above are given a $20,000 check from the Department of Labor. v d. Minors' maximum amount of work hours per week is cut in half. - e. Minors now must be paid 10% above the federal minimum wage. - The corresponding table shows the production and cost Quantity Total Total Number information for a perfectly competitive firm that produced cost revenue of workers produces anvils. 5 20 12.5 1 10 30 25 What is the price of each anvil? 22 43 55 32 59 80 4 40 78 100 5 47 90 117.5 6 price per anvil: $ 53 115 132.5 58 143 145 64 174 160 9 Assume the company currently employs 6 workers. If they add one worker so that they have 7 workers, what is the additional worker's marginal (physical) product? marginal product of labor: units Assume the company currently employs 4 workers. If they add one worker so that they have 5 workers, what is the additional worker's marginal revenue product? marginal revenue product: $Martin's Magical Milk Farm produces cow's milk and sells it to a local store for $2.20 per gallon. Agricultural workers in the area are paid a fixed wage rate of $70 per day. Use this information and the information in the table to answer the questions. Assume that the milk farm is profit maximizing. Workers Quantity of milk per day (gallons) 0 0 80 150 3 200 4 230 250 6 255 What is the marginal product of labor (MPL) for employing a third worker? MPL3 = gallons What is the value of the marginal product of labor (VMPL) for employing a sixth worker? VMPL6 = $ How many employees should Martin's farm employ? employees How many employees should Martin's farm employ if the price he received per gallon of milk rose to $2.50? employeesE D C B A Quantity of labor