1. What will happen to demand for workers if wage drops in short run labor hiring decision in the labor market? Explain your answer using appropriate graphs.

1. Why does a profit-maximizing firm hire workers up to the point where the wage equals the value of marginal product? Show that this condition is identical to the one that requires a profit-maximizing firm to produce the level of output where the price of the output equals the marginal cost of production.

1. Why is the short-run demand curve for labor downward sloping?

1. Suppose the firm is hiring labor and capital and that the ratio of marginal products of the two inputs equals the ratio of input prices. Does this imply that the firm is maximizing profits? Why or why not?

1. What factors determine the elasticity of the industry's labor demand curve? How to calculate the elasticity of labor demand?

1. Explain the impact of a payroll tax assessed on firms using appropriate graph.

1. Using appropriate graph, explain the impact of a payroll subsidies on firms' demand curve for labor.

1. Using appropriate graph, explain the impact of immigrants on total employment and the equilibrium wage if the Immigrants and natives are perfect substitutes in production.

1. Using appropriate graph, explain the impact of immigrants on total employment and the equilibrium wage if the Immigrants and natives are complementary in production.

1. Using appropriate graph, explain the hiring decision of a nondiscriminating Monopsonist.