Don's Donuts hires workers in a perfectly competitive resource market for unskilled labor.

A. Using correctly labeled side-by-side graphs for the labor market and Don's Donuts, show each of the following.

(i) The equilibrium wage and quantity for unskilled labor, labeled WEand QE, respectively

(ii) The wage paid by Don's Donuts and the quantity of unskilled labor hired, labeled WDand QD, respectively

B. Is the marginal factor cost of unskilled labor for Don's Donuts greater than, less than, or equal to WE?

C. Now assume that the government imposes an effective minimum wage for unskilled labor.

(i) Show the minimum wage on your graphs in part (a), labeled WMin

(ii) On the labor market graph in part (a), show the quantity of unskilled labor supplied in the labor market as a result of the minimum wage, labeled QS

(iii) As a result of the new minimum wage, will the marginal revenue product of the last worker hired by Don's Donuts increase, decrease, or stay the same?