# 1.) Suppose Jim owns a sub shop in a competitive market. If an additional worker offers marginal productivity of 40 subs which can sell for $5 each, what is the highest wage Jim should be willing to pay that worker? Show your work and explain your reasoning. 2.) Consider the market for managers. Suppose job growth increases the labor demand for managerial labor. Also assume that the opportunity cost of earning the MBA increases for many people. Let’s assume it typically takes about two years to complete the MBA, so what happens to the equilibrium wage for managers in two years other things equal? Use the supply and demand model to explain your reasoning: Because I have not said anything about the relative size of the shifts you will need to draw two pictures in order to fully characterize the possible results.

1.) Suppose Jim owns a sub shop in a competitive market. If an additional worker offers marginal productivity of 40 subs which can sell for $5 each, what is the highest wage Jim should be willing to pay that worker? Show your work and explain your reasoning.

2.) Consider the market for managers. Suppose job growth increases the labor demand for managerial labor. Also assume that the opportunity cost of earning the MBA increases for many people. Let’s assume it typically takes about two years to complete the MBA, so what happens to the equilibrium wage for managers in two years other things equal? Use the supply and demand model to explain your reasoning: Because I have not said anything about the relative size of the shifts you will need to draw two pictures in order to fully characterize the possible results.

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**1.) Suppose Jim owns a sub shop in a competitive market. If an additional worker offers marginal productivity of 40 subs which can sell for $5 each, what is the highest wage Jim should be willing to pay that worker? Show your work and explain your reasoning.**

**2.) Consider the market for managers. Suppose job growth increases the labor demand for managerial labor. **Also** assume that the opportunity cost of earning the MBA increases for many people. Let’s assume it typically takes about two years to complete the MBA, so what happens to the equilibrium wage for managers in two years other things equal? Use the supply and demand model to explain your reasoning: Because I have not said anything about the relative size of the shifts you will need to draw two pictures in order to fully characterize the possible results.**

1.) Suppose Jim owns a sub shop in a competitive market. If an additional worker offers marginal productivity of 40 subs which can sell for $5 each, what is the highest wage Jim should be willing to pay that worker? Show your work and explain your reasoning.

2.) Consider the market for managers. Suppose job growth increases the labor demand for managerial labor. Also assume that the opportunity cost of earning the MBA increases for many people. Let’s assume it typically takes about two years to complete the MBA, so what happens to the equilibrium wage for managers in two years other things equal? Use the supply and demand model to explain your reasoning: Because I have not said anything about the relative size of the shifts you will need to draw two pictures in order to fully characterize the possible results.

*2.) Consider the market for managers. Suppose job growth increases the labor demand for managerial labor. *Also* assume that the opportunity cost of earning the MBA increases for many people. Let’s assume it typically takes about two years to complete the MBA, so what happens to the equilibrium wage for managers in two years other things equal? Use the supply and demand model to explain your reasoning: Because I have not said anything about the relative size of the shifts you will need to draw two pictures in order to fully characterize the possible results.*