Q1. Why does a profit-maximizing firm hire workers up to the point where the wage equals the value of marginal product? Show that this condition is identical to the one that requires a profit-maximizing firm to produce the level of output where the price of the output equals the marginal cost of production.
Q2. A physician's office expenses increase 10 percent so she decides to raise the price of office visits by that much. Assuming the demand curve for office visits does not shift, what will happen to the total number of office visits and practice revenues?