1. Refer to the article An Online Tune-Up for the UsedCar Marketplace in The New York Times, by Farhad Manjoo of April 22, 2015. (a) Name three reasons why Linda Lo, a buyer of a second-hand car, had difficulties buying what she wanted in the traditional markets. (b) How does the online company Beepi avoid the adverse selection problem? (c) Does Beepis business model solve the costly-tofake and full-disclosure principles? Explain. 2. Suppose the marginal product of labor is currently equal to its average product. (a) If you were one of ten new workers the firm was about to hire, would you prefer to be paid the value of your average product or the value of your marginal product? (b) Would it be in the interests of an employer to pay you the value of your average product? 3. A firms short-run production function is given by Q = ( 5 4 L 2 for 0 L 2, 3L 1 4 L 2 for 2 < L 7. (a) Sketch the production function. (b) Find the maximum attainable production. How much labor is used at that level? (c) Identify the ranges of labour utilization over which the marginal product of labour is increasing and decreasing. (d) Identify the range over which the marginal product of labour is negative. 4. Sketch the short-run VC, FC, TC, AVC, AFC, ATC, and MC curves for the production function Q = 3KL, where K is fixed at 2 units in the short-run, with r = $3 per capital unit and w = $2 per labour unit. 5. A firm with the production function Q = F(K, L) is producing an output level Q at minimum cost in the long run. How will its short-run marginal cost when K is fixed compare with its short-run marginal cost when L is fixed?