You have recently opened your own website design business. You charge your clients a price of $500 per project and are considering hiring additional workers to assist you in expanding your business. The market wage for website designers is $2,800 per month.

The table provides data on your marginal product for each additional website designer you hire.

1. Use the information to calculate the marginal revenue product, total output, and total revenue associated with each number of employees.
2. If this is the only cost you incur from hiring an additional worker, calculate the marginal cost and profits for each additional worker.
3. Using the Rational Rule for Employers, how many workers should you hire each month?
4. What's the number of workers that maximizes your profits?

No. of website designers	Marginal Product	MRP(MP x $500)	Wages per designer	Total Output (Add Marginal Product downwards)	Total Revenue (total output x $500)	Total Costs (Wages x No. of designers)	Profit (Total revenue - Total cost)
1	10	$5000	$2800	10	$5000	$2800	$2200
2	9	$4500	$2800	19	$9500	$5600	$3900
3	8	$4000	$2800	27	$13,500	$8400	$5100
4	7	$3500	$2800	34	$17,000	$11,200	$5800
5	6	$3000	$2800	40	$20,000	$14,000	$6000
6	5	$2500	$2800	45	$22,500	$16,800	$5700

Consider the labor market for workers building boats. For each of the following scenarios draw a graph showing the effect on the labor market for boat builders. How does the equilibrium wage and number of boat builders change?

a. Boat manufacturers begin using more efficient robots on the assembly line and the substitution effect dominates the scale effect.

b. There is an increase in the wage of automobile manufacturing workers (assume boat builders and automobile workers have similar skills and can work in both industries).

c. There is a decrease in unemployment benefits.