Problems 3, 4, 6, 8 3. Suppose that the supply curve for lifeguards is L =20 and that the demand curve for lifeguards is L =100 - 20W, where L = the number of lifeguards and W = the hourly wage. Graph both the demand and supply curves. Now, suppose that the government imposes a tax of $1 per hour per worker on companies that hire lifeguards. Draw the new (after-tax) demand curve in terms of the employee wage. How will this tax affect the wage of lifeguards and the number employed as lifeguards? 4. The output of workers at a factory depends on the number of supervisors hired (see Table 3P.4). The factory sells its output for $0.50 each, it hires 50 production workers at a wage of $100 per day, and it needs to decide how many supervisors to hire. The daily wage of supervisors is $500, but output rises as more supervisors are hired, as shown in Table 3P.4. How many supervisors should it hire? ible 3P.4 Supervisors and Output Supervisors Output (units per day) 11,000 14,800 18,000 19,500 20,200 20,600 oo W N = O 6. Table 3P.6 shows the number of cakes that could be baked daily at a local bakery, depending on the number of bakers. Table 3P.6 Bakers and Cake Production Number of bakers Number of cakes 0 0 1 10 2 18 3 23 4 27 a. Calculate the MP . b. Do you observe the law of diminishing marginal returns? Explain. c. Suppose each cake sells for $10. Calculate the MRPL. d. Draw the MRPL curve, which is the demand curve for bakers. e. If each baker is paid $80 per day, how many bakers will the bakery owner hire, given that the goal is to maximize profits? How many cakes will be baked and sold each day? oo . (Appendix 3A) The demand curve for gardeners is GD = 19 - W, where G = the number of gardeners, and W = the hourly wage. The supply curve is G =4+2W. a. Graph the demand curve and the supply curve. What is the equilibrium wage and equilibrium number of gardeners hired? b. Suppose that the town government imposes a $2 per hour tax on all gardeners. Indicate the effect of the tax on the market for gardeners. What is the effect on the equilibrium wage and the equilibrium number of gardeners hired? How much does the gardener receive? How much does the customer pay? How much does the government receive as tax revenue