Given the data in Table A, complete the labor demand schedule shown in Table B. Contrast this schedule to the value of marginal product schedule that would exist given this data. Explain why the labor demand and VMP schedules differ.
Table A:
inputs of labor total product product price
0 0 $1.10
1 17 1.00
2 32 .90
3 45 .80
4 55 .70
5 62 .65
6 68 .60

Table B:
labor demand schedule
wage rate quantity demanded
$18
14
11
6
2
1

b) Explain how each of the following would affect the demand schedule you derived in Question 4)a): (i) an increase in the price of a gross substitute for labor, (ii) a decrease in the price of a pure complement in production with labor, (iii) a decrease in the demand for the product that the labor helps produce.

c) Referring to the output and substitution effects, explain why an increase in the wage rate for autoworkers will generate more of a negative employment response in the long run than in the short run. Assume there is no productivity increase and no change in the price of nonlabor resources.