Based on the graph below, how many workers should the firm hire to maximize profits? Value of marginal product $500 $400 $300 $200 Market wage $100 per day VMP (labor demand curve) Quantity of workers hired

Part a. What is the marginal physical product(MPP) of the third unit of labor hired? Part b. What is the marginal revenue product(MRP) of the fourth unit of labor hired? Part c. If the labor market equilibrium wage(W*) were $9 per hour, how many workers would a firm wish to hire? Why?

An increase in the wage rate (w) will :   A.   the slope of the isocost line would increase and the isocost line would become steeper   B.   shift the firm's isocost line to the right   C.   the slope of the isocost line would decrease and the isocost line would become steeper   D.   shift the firm's isocost line to the left

Explain the meaning and significance of the fact that the demand for labor is a derived demand. Why do labor demand curves slope downward?