Please answer all questions as they are important.

1. Bad Breath, Inc. Sells its output at $1 per unit into competitive markets. Bad Breath's factory is the only employer of labor in Gilroy, California. It faces a supply from competitive workers of QL = w where QL is the number of workers hired per year and w is the annual wage. Each additional workers hired adds one less unit of output than was added by the previous worker. the 30,000th worker adds nothing to the total output. Bad Breath must pay all workers the same wage rate and, because it has to raise wages to get more labor, each additional worker costs the company 2QL dollars per year. to maximize profit, how much labor should Bad Breath hire and what wage should it pay? Does efficiency prevail in the Gilroy labor market? If not, what is the size of the deadweight loss? You must use a diagram and show the appropriate values on it.

2. The data in Table 7.1 relate total output to the amount of labor employed when the amounts of other inputs such as capital are held constant. Use it to answer the following: If the price of final output is $10 and the wag rate is $120, how many workers will be hired? (Assume that the output market is competitive.) Illustrate your answer with a graph similar to Figure 16.1). Use the pictures attached to answer this question.

Table 7.1 Production with One Variable Input Amount Amount Total Average Product Marginal Product of Capital of Labor Product of Labor of Labor 5 5 18 9 13 30 40 w w w w w w w w w w 45 48 49 49 6.1 45Figure 16.1 Marginal Marginal value product A Competitive Firm's Demand for Labor: product ( MP L ) One Variable Input (MPL X P) $400 4 With labor as the only variable input, we can onion convert labor's marginal product curve, MP, $300 3 into the marginal value product curve, MVP, by multiplying the marginal product of labor $200 boorda 2 by the price of the commodity produced. MP _ and MVPL(MP _ X P) The MVP_ curve is the competitive firm's $100 1 demand curve for labor if other inputs cannot be varied. 187 0 15 20 25 Quantity of labor