Resource Market FRQ Test #6 2023 1) Ajah's Equestrian hires workers in a perfectly competitive factor (resource) market for unskilled labor. a) using correctly labeled side-by-side graphs for the labor market and Ajah's Equestrian, show each of the following: i) the equilibrium wage and quantity of labor, labeled WE and QE respectively. ii) the wage paid by Ajah's Equestrian and the quantity of labor hired, labeled WA and QA respectively. b) Is the marginal factor (resource) cost of unskilled labor for Ajah's Equestrian greater than, less than or equal to the market wage? Explain. c) Now assume that the government imposes an effective minimum wage for unskilled labor. i) Show the minimum wage on your graph 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. As a result of the minimum wage, will the marginal revenue product of the last worker hired by Ajah's Equestrian increase, decrease or remain the same? # of unskilled workers hired Quantity of radios produced per day 0 0 20 2 45 3 60 4 70 75 6 79 80 2) Assume that MYNoize Company produces clock radios as shown in the short-run production function in the above table. MYNoize can sell all the clock radios it produces at a market price of $20 each and can hire all the unskilled labor it needs at a wage of $90 per day per worker. Assume that labor is the only variable input. a) b) using the information above, draw a correctly labeled graph of MYNoize supply curve for labor. What is MYNoize profit maximizing level of output? Explain. i) Suppose that MYNoize is the first company to use a new technology that increases labor productivity. ii) how will the new technology affect the quantity of unskilled labor MYNoize hires? Explain. how will the new technology affect the wage paid to MYNoize's unskilled workers