1. Discuss two factors that would increase demand for labor. (Hint: Recall that the demand for factors of production or resources is called a derived demand)
2. If the market price of the good or service that a firm produces increases, what happen to the demand of labor? Explain.
3. Numerical Problems. Answer the two questions below.
   1. Take a look at the numerical example on page 76 of the online text Principles of Microeconomics. What would be the marginal production at a level of 20 workers? Calculate. What can be said about the total production of cars as more workers are added (Hint: use the economic concept from the chapter in your answer)?
   3. Using your answer from (a) and using the information below:
      1. Each worker costs the firm $4,000 per month.
      2. Each acre of land costs the firm $1,000 per month.
      3. Each machine costs the firm $600 per month.

-Each worker costs the firm $4,000 per month.

-Price of the output (car) is $20,000

Should the firm move from the 15th to the 20th worker? In other words, should the firm hire 20 workers. Why? (Hint: You need to calculate the cost of total workers and the marginal revenue product [MRP = price of output * marginal product of labor].)

Assignment Expectations

Use concepts from the modular background readings as well as any good-quality resources you can find. Be sure to cite all sources within the text and provide a reference list at the end of the paper.

Length: 4–5 pages double-spaced and typed.

The following items will be assessed in particular:

• Your ability to understand marginal productivity and how firms make decisions.
• Some in-text references to the modular background material (APA formatting not required).
• The essay should address each element of the assignment. Remember to support your answers with solid references including the case readings.