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3. Mr. Marks Market Mr. Mark runs a traveling market that hires local workers in each city it visits. The demand for market activities is uncertain. At the end of the year Mr. Mark reviews his financial records and discovers some puzzling differences between his experiences in small and large cities: Ht arary paid0t pad tter52 ii. He alwars hired the same quantity of labor in small cities (30 workers) but different quantities in big cities either 20 or 40 workers) a. Using Figure 3-3 (seen in the book or in lecture) as a model, illustrate the markets employment of workers with two graphs, one for the typical small city and one for the typical big city. Assume that the demand curves for labor are linear and parallel, with vertical intercepts of $18 (high demand) and $14 (low demand small city large cityb. In the typical big city with high demand, profit is (Show your work.) In the typical big city with low demand, profit is c. d. In the typical small city with high demand, profit is Show your work.) e In the typical small city with low demand, profit is(Show your work) f. Assume that in either size of city the demand for Mr. Marks market is high with probability 20% and low with 80%, Gren these probabilities, the in a big city and__in a small city. (Show your work.) g What would the probability of high demand have to be for the expected profit in the big city to be exactly the same as the expected profit in the small city? Why?

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Swelt ert @s リ pege-cat 18 leco denced 1D 0 ゆ 4135 computed is$ 60 (cn, puled of the onpeete

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