Question: (a) Explain the relationship between the shape of the marginal cost curve and the marginal product of labor curve.

(b) Evaluate the economic wisdom of the statements made in the following scenarios. Briefly justify your answers.

(i) My friend Bill just told me “I paid $25 for the materials to make these flower arrangements, and then sold them at the craft fair for $25, so I just broke even.”

(ii) Joe and Marcy are at the video store. Marcy suggests that they rent the movie they have both been dying to see - Titanic. Joe says, ”No can do. We rented that one last week for $5, but got too busy to see it and paid $10 in late fines. Re-renting it is a waste of money”. All the movies in the store cost $5.