Firm A has a monopoly in the output market. The demand for its output is $p = 20 - 1Q$. Production is such that $Q = L$. Firm A hires only unionized labor. The marginal cost to the union is $8 per unit of labor. The union will sell A. 6.00 units of labor. B. 3.00 units of labor. C. 4.60 units of labor. D. 7.90 units of labor. What will the wage rate be? A. $4.60 B. $14.00 C. $19.47 D. $17.00
Added by Amy B.
Close
Step 1
Step 1: To maximize its profit, Firm A will hire labor up to the point where the marginal cost of labor equals the marginal revenue product of labor. Show more…
Show all steps
Your feedback will help us improve your experience
James Kiss and 77 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
Suppose that a competitive firm hires labor up to the point at which the value of the marginal product equals the wage and that labor is the only input that varies for the firm. If the firm pays a wage of $700 per week and the marginal product of labor equals 35 units per week, then the marginal cost of producing an additional unit of output is a. $0. b. $20. c. $700. d. $35.
James K.
Suppose that labor is the only input used by a perfectly competitive firm. The firm's production function is as follows: a. Calculate the marginal product for each additional worker. b. Each unit of output sells for \$10. Calculate the value of the marginal product of each worker. c. Compute the demand schedule showing the number of workers hired for all wages from zero to \$100 a day. d. Graph the firm's demand curve. e. What happens to this demand curve if the price of output rises from \$10 to \$12 per unit?
Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 6 workers the firm produces 90 units of output. Fixed costs of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the marginal cost of production when the firm hires the 7th worker? (Please show the process of getting the answer)a. $10 b. $1.50 c. $2.50 d. $5
Jennifer S.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD