Microeconomics

 
Please solve the following problem. Here are the requirements:

1- For each step please provide a short explanation of the result(s) you display. Solutions without explanations will lose 50% of the credit.

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2- The only source needed for doing this assignment is your textbook. You do not need to use reference or bibliography.

3- Please note no hand written paper will be accepted and a grade of zero will be assigned to the paper.

4- I am asking everyone to please submit the paper on time in Canvas and please do not email any paper after the deadline. They will not be accepted.
Problem:

Jim owns a music school teaching guitar. The school has a small space and thus any additional teacher adds less to total production (MP is diminishing). Each guitar lesson costs $25/hour. Here is Jim’s Production Function:

                                              Labor                             Q (quantity of lessons)
                                                 0                                  0
                                                 1                                 10  
                                                 2                                 17                             
                                                 3                                  23
                                                 4                                  28
                                                 5                                  32
                                                 6                                  35                          
                                                 7                                   37
                                                 8                                   38

The daily wage rate for the teachers are: $75 , $100 , $125 , $150 , $175 , and $200.

A) Find Jim’s labor demand schedule (Marginal Revenue Product) for each of the above wages.

B) If the price for guitar lessons goes up to $35/hour, Jim’s demand for Labor will change. Find his new Labor demand at each of the same wage rates above.

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