Do the following 2 questions on a separate sheet of paper.Be sure to follow instructions completely

1.

Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer.

The table below shows the short-run production function for Michelle's Accounting Company.

number of bookkeepers total product per hour

1 8

2 20

3 40

4 55

5 65

6 70

7 65

8 55

(a) After which bookkeeper do diminishing marginal returns begin for Michelle's Accounting Company? Explain using numbers.

(b) Assume Michelle's Accounting Company sells its accounting services in a perfectly competitive market at a price of $20. Calculate the marginal revenue product of the sixth bookkeeper. Show your work.

(c) Michelle's Accounting Company hires bookkeepers in a perfectly competitive labor market for bookkeepers at a wage rate of $110 per hour, and the market price of services remains $20. How many bookkeepers will Michelle's Accounting Company hire to maximize its profit? Explain using marginal analysis.

(d) Assume bookkeepers and accounting software are substitutes in providing accounting services by all accounting firms in the market. If accounting software, a fixed input, becomes less expensive and Michelle's Accounting Company provides the same quantity of accounting services, will each of the following increase, decrease, or stay the same?(i) The wage rate Michelle's Accounting Company will pay its bookkeepers. Explain.(ii) The demand curve for bookkeepers for Michelle's Accounting Company. Explain.

2.

CleanIt is a perfectly competitive, profit-maximizing trash collection firm. CleanIt hires workers in a perfectly competitive labor market.

Draw side-by-side graphs for the labor market and for CleanIt and show each of the following.

The market wage, labeled WM, and the quantity of workers hired in the market, labeled LM

The marginal factor (resource) cost curve, labeled MFC

The marginal revenue product curve, labeled MRP

The wage paid by the firm, labeled WF, and the quantity of workers hired by the firm, labeled LF

Assume that CleanIt is the only firm in the industry to adopt a new technology. The new technology increases the productivity of CleanIt's workers.

In the short run, will the wage paid by CleanIt be higher than, lower than, or equal to WF? Explain.

In the short run, will the number of workers hired by CleanIt increase, decrease, or stay the same? Explain.

CleanIt uses capital in the form of trucks, which it rents for $10,000 each. The marginal product of the last truck used is 100,000 units. If CleanIt is minimizing its costs and the marginal product of the last worker hired is 500 units, calculate the wage. Show your work.