1. What is marginal product of labor? Compute marginal product of labor in the third column of the table below. Does marginal product increase or decrease when more and more workers are employed in the firm? why?

Number of Workers	Total Output	Marginal Product
0	0	--
1	200
2	450
3	600
4	650

2. Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month. Fill-in all the empty cells

Output (Instructional Modules per Month)	Fixed Costs	Variable Costs	Total Cost	Average Fixed Cost	Average Variable Cost	Average Total Cost	Marginal Cost
0	$1,080
1	$1,080	$ 400	$1,480				$400
2						$965	$450
3		$1,350	$2,430
4		$1,900			$475

3. The following table presents cost and revenue information for a firm operating in a competitive industry. Fill-in the marginal cost, total revenue, and marginal revenue columns. What is the profit maximizing level of output?

COSTS			REVENUES
Quantity Produced	Total Cost	Marginal Cost	Quantity Demanded	Price	Total Revenue	Marginal Revenue
0	$100	--	0	$120		--
1	$150		1	$120
2	$202		2	$120
3	$257		3	$120
4	$317		4	$120
5	$385		5	$120
6	$465		6	$120
7	$562		7	$120
8	$682		8	$120

4. At its current level of production a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm's marginal cost curve crosses the marginal revenue curve at an output level of 1,000 units. What is the firm's current profit? What is likely to occur in this market and why?

5. Describe the source of tension between cooperation and self-interest in a market characterized by oligopoly. Use an example of an actual cartel arrangement to demonstrate this.