AP Microeconomics- Unit 5 FRQ

2. Suppose that Rainco is a profit-maximizing firm that makes umbrellas. It hires its labor in a perfectly competitive labor market. Rainco also sells its umbrellas in a perfectly competitive output market. a. Define the marginal revenue product of labor (MRPL). b. Using correctly labeled side-by-side graphs, show each of the following. i. The equilibrium wage in the labor market ii. The labor supply curve Rainco faces iii. The number of workers the Rainco will hire c. Rainco develops a new umbrella-making technology that increases its labor productivity. Currently this technology is only available at Rainco not available to any other firm. Explain how the increased productivity at Rainco will affect each of the following. i. Wage rates ii. Number of workers hired