Consider a firm for which production depends on two normal inputs, labor and capital, with prices w and r, respectively. Initially the firm faces market prices of w = 6 and r = 4. These prices then shift to w = 4 and r = 2. (a) In which direction will the substitution effect change the firm's employment and capital stock? (b) In which direction will the scale effect change the firm's employment and capital stock? (c) Can we say conclusively whether the firm will use more or less labor? More or less capital?

Union A wants to represent workers in a firm that would hire 20,000 workers if the wage rate is $12 and would hire 10,000 workers if the wage rate is $15. Union B wants to represent workers in a firm that would hire 30,000 workers if the wage is $20 and would hire 33,000 workers if the wage is $15. Which union is more likely to organize?

Please describe how an union may behave by strategically exploiting Marshall's 4 rules

Suppose a firm purchases labor in a competitive labor market and sells its product in a competitive product market. The firm's elasticity of demand for labor is 0.4. Suppose the wage increases by 5 percent. What will happen to the amount of labor hired by the firm? What will happen to the marginal productivity of the last worker hired by the firm?