1.The production function says thatReal GDP (Y)is a function of two factors, Labor (L)andCapital (K).Assume that capital (K) is fixed at 100.When L is 300, Y is 1000; when L is 400 Y is 1500, when L is 500 Y is Y is 1900; and when L is 600 Y is 2,200.Draw a graph of the production function using the data above.

What would happen to your graph in general (obviously you don't know what the real numbers would be) ifcapital increased from 100 to 200 units?

2.Draw a graph of the labor market in equilibrium at a real wage rate of $25 and quantity of labor of 100.Show on 4 different graphs what would happen to real wage rates and labor quantity if a) labor supply decreases, b) labor supply increases, c) labor demand decreases, d) labor demand increases.