Assume a firm uses labor and capital to make shoes. They pay workers a wage (w) and the cost of capital is r. Let w equal $2.00 and r equal $2.00. Show what happens to labor

demand when the following occurs. Start with nice convex isoquants. Show your work using graphs.

1.The wage is cut in half.

2.Assume a production function of the form, Q = 0.5*L + 0.5*K. Start with the initial wage and cost of capital. Resolve the equilibrium and then let the wage triple, ceteris paribus.