Suppose there is a firm who hires workers as part of their production. The firm makes use of two input: labour (L) and capital (K). Their marginal product of labour is given by: MPL = (100 - 10L + KL) Assume that we are in the short-run (capital is fixed). Also assume that firm currently owns 5 units of capital. The price of the output that they are producing is currently $1. 8. Describe, in words, the relationship here between capital and the productivity of labour. How does this mean the quantity of capital is likely to affect labour demand? [2 points] Now suppose that households in this local economy work in the labour market. They supply their labour according to: Qs = w - 10 9. Draw the labour supply curve and the Marginal Revenue Product of Labour (MRPL) curve. Also label the labour market equilibrium (w* & L*). Show your work for how w* and L* are found. Be sure to label then x-intercepts and y-intercepts for both curves. Have the quantity of labour (L) on the x-axis and the wage rate on the y-axis. [5 points] Now suppose that the firm is able to increase its units of capital from 5 units to 7 units of capital. 10. What happens to labour demand? Show another figure with the new labour demand curve and the same supply curve. Be sure to label then x-intercept and y-intercept of this new demand curve. Haver the quantity of labour (L) on the x-axis and the wage rate on the y-axis. What is the new equilibrium wage rate and the number of units of labour employed? Show your work. [5 points]