1. A firm that is hiring labour (L) and capital (K) competitively is selling its product (Q) in a competitive market as given in the following table. The price of a product Q is $4. Each worker costs $20 and each capital costs $5.

L	K	Q	MPL	VMPL
0	4
1	4	20
2	4	37
3	4	51
4	4	62
5	4	70
6	4	75
7	4	77
8	4	76

a. Complete the columns of Marginal Product of Labour (MPL) and Value of the Marginal Product of Labour (VMPL) in the above table. (2 marks)

b. How many workers will the firm hire? Explain why? (3 marks)

c. Calculate the maximum profit that this firm will earn. (2 marks)

d. Unemployment has gone up due to the COVID-19 pandemic. As a result, the wage rate has fallen from $20 to $8. Recalculate the number of workers this firm will now hire and its maximum profit. (5 marks)

2. How do the following factors shift the demand for labour or the supply of labour curve? Also indicate what would happen to the equilibrium wage rate and equilibrium quantity of labour. (Assume everything else is constant in each case). (2 marks each)

a. The price of product X that these workers are producing increases.

b. Due to the COVID-19 pandemic, workers are not able to come to Canada for work.

c. Workers now enjoy more leisure hours.

d. Capital becomes cheaper and labour and capital are substitutes.

3. A competitive firm is selling its product. The price for its product is $8. Round off your answers to two decimal places.

a. Complete the TC, AFC, AVC, ATC, MC, TR, MR, and profit columns in the table below. (8 marks)

Total product	TFC	TVC	TC	AFC	AVC	ATC	MC	TR	MR	Profit
0	$10	$0
1	$10	$7
2	$10	$12
3	$10	$21
4	$10	$40
5	$10	$75
6	$10	$132
7	$10	$217
8	$10	$336
9	$10	$495
10	$10	$700

b. At what price and outputlevel will the above firm maximize its profit or minimize its loss? Should this firm continue to sell in the short run? Should it continue to sell in the long run? Explain your answer. (5 marks)

c. Based on the table, what is the important relationship between ATC and MC? (2marks)

4. Explain three phases of a long-run average total cost curve. (6 marks)

5. What long-run effect will an increase in market demand have on an increasing-cost industry (an upward-sloping long-run supply curve)? (6 marks)

6. In a monopoly market, suppose the linear MC intersects MR at 15 units of output. At this level of output, MR and MC are $2. The price that the monopolist charges is given as $5. MC also intersects the linear demand curve at 25 units of output. At this level, P and MC are $3. The price is $11 when demand is zero.

a. Calculate the monopolist's total revenue if the monopolist charges a single price. (2marks)

b. Calculate the monopolist's total revenue if the monopolist uses perfect price discrimination. (4 marks)

c. Calculate the deadweight loss if the monopolist charges a single price. (2 marks)

7. a. Complete the following table that shows the costs and revenues of a monopolist. (4 marks)

Total product	Price	TR	MR	TC	MC	Profit
0	30			$8
1	28			$22
2	26			$34
3	24			$50
4	22			$76
5	20			$118
6	18			$182
7	16			$274
8	14			$400
9	12			$566
10	10			$778

b. Determine the profit-maximizing level of output. What is the maximum profit? (2marks)

c. Determine the level of output where TR is maximized. What is the maximum value of TR? (2 marks)

d. Why is the profit not maximized when total revenue is maximized? (2 marks)

8. What does areas B, C, and D represent in the following diagram? The monopolist produces at Qm and charges a price Pm. A perfectly competitive firm produces at Qc and charges a price Pc. (3 marks)