4. Profit maximization

Consider Live Happley Fields, a small player in the strawberry business whose production has no individual effect on wages and prices. Live Happley's production schedule for strawberries is given in the following table:

Labor	Output
(Number of workers)	(Pounds of strawberries)
0	0
1	16
2	30
3	42
4	52
5	60

Suppose that the market wage for strawberry pickers is $200 per worker per day, and the price of strawberries is $15 per pound.

On the following graph, use the blue points (circle symbol) to plot Live Happleys labor demand curve when the output price is $15 per pound.

Note: Remember to plot each point between the two integers. For example, when the number of workers increases from 0 to 1, the value of the marginal product of for 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.

Demand P = $15Demand P = $130123453002702402101801501209060300WAGE (Dollars per worker)LABOR (Number of workers)

At the given wage and price level, Live Happley should hire .

Suppose that the price of strawberries decreases to $13 per pound, but the wage rate remains at $200.

On the previous graph, use the purple points (diamond symbol) to plot Live Happley's labor demand curve when the output price is $13 per pound.

Now Live Happley should hire when the output price is $13 per pound.

Assuming that all strawberry-producing firms have similar production schedules, a decrease in the price of strawberries will cause the strawberry pickers to .

Suppose that wages decrease to $150 due to a decreased demand for workers in this market. Assuming that the price of strawberries remains at $13 per pound, Live Happley will now hire .