If a monopolist has an output price of $10, marginal revenue equal to $4, and faces a fixed wage rate of $7, then the monopolist should hire labor until the marginal revenue product is equal to

Question

Quizplus · Accepted Answer

The monopolist should hire labor until the marginal revenue product (MRP) is equal to the wage rate. In this case, the fixed wage rate is $7, therefore the monopolist should hire labor until MRP = $7. There is no information given about the MRP in the question, but it is not relevant to the answer since the fixed wage rate determines the level of employment.

If a Monopolist Has an Output Price of $10, Marginal