$500 5000 (147.2,3693.0) 4500- 4000 3500 (147.2,2943.3) 3000 - 1449.7 Revenue, costs ($) 2500 Productivity: 38.75 200 1960 Returns to scale: 0.67 Optimal choice 50 100 150 200 250 300 350 4 Labor (hours) Price: 4 Wage: 20 Use the interactive above to answer the question below. What happens to the labor demand by the firm when both the wage and price double (and everything else stays the same)? Give both the right direction as well as the right reason. Labor remains unchanged, because the increase in the marginal revenue product of labor is offset by the increase in the marginal cost Labor remains unchanged, because the wage and price don't affect the marginal cost and benefit if hiring workers Labor demand goes up, because the marginal revenue product of labor increases. Labor demand goes down, because the marginal revenue product of labor increases. O Labor demand goes up, because the marginal cost of labor decreases Labor demand goes down, because the marginal cost of labor decreases