Please solve all four parts Will give likeHand written solutions not allowed. AP CFactor MarketsInclude correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagrammust have all axes and curves clearly labeled and must show directional changes. If the question prompts you to"Calculate," you must show how you arrived at your final answer.Bobby's Bakehouse is the only bakery in a small remote town, and Bobby's Bakehouse is the only employer of bakers inthe area. The graph below shows the market for bakers with the marginal factor (resource) cost curve, the labor supplycurve, and the marginal revenue product curve.Wage Rate ($)22 22 220161310030 45 60 80 100 12013515090MarginalFactor CostSupplyFactor MarketsMarginalRevenue ProductJox180 200Quantityof Bakers160(a) If the wage rate is $13, state whether there will be a shortage or a surplus of bakers and calculate its size. Show yourwork(b) Identify the profit-maximizing number of bakers that Bobby's Bakehouse will hire. Explain using the labeling on thegraph(c) Identify the profit-maximizing wage rate that Bobby's Bakehouse will pay its bakers, Explain using the labeling on thegraph(d) If the marginal product of bakers increases, what will happen to the quantity of output produced by Bobby'sAP Microeconomics Page 11 of 13Bakehouse? Explain(e) Assume instead that Bobby's Bakehouse uses both labor and capital in its production of baked goods. The marginalproduct of the last unit of labor hired is 16 baked goods per hour and the marginal product of the last unit of capital rentedis 50 baked goods per hour; the hourly wage rate for labor is $8 and the hourly rental price for capital is $5. To minimizethe cost of producing its current level of output, should Bobby's Bakehouse rent more capital, less capital, or the sameamount of capital? Explain using marginal analysis.

With respect to the question, profit maximising quantity is that amount of quantity where marginal…

Wage Rate ($) No 229 22 AP 20 16 13 10 30 45 60 80 100 120135150 90 Marginal Factor Cost Supply Factor Markets Marginal Revenue Product 180 200 160 (a) If the wage rate is $13, state whether there will be a shortage or a surplus of bakers and calculate its size. Show your work Quantity of Bakers (b) Identify the profin-maximizing number of bakers that Bobby's Bakehouse will hire. Explain using the labeling on the graph (c) Identify the profie-maximizing wage rate that Bobby's Bakehouse will pay its bakers, Explain using the labeling on the graph (d) If the marginal product of bakers increases, what will happen to the quantity of output produced by Bobby's AP Micrones Page 11 of 13 Toe Bide Bakehouse? Explain (e) Assume instead that Bobby's Bakehouse uses both labor and capital in its production of baked goods. The marginal product of the last unit of labor hired is 16 baked goods per hour and the marginal product of the last unit of capital rented is 50 baked goods per hour; the hourly wage rate for labor is $8 and the hourly rental price for capital is $5. To minimize the cost of producing its current level of output, should Bobby's Bakehouse rent more capital, less capital, or the same amount of capital? Explain using marginal analysis.

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter2: Choice In A World Of Scarcity

Section: Chapter Questions

Problem 2SCQ: Return to the example in Figure 2.4. Suppose there is an improvement in medical technology that...