Mr. Barnes has a monopoly in the production of electricity in the local market. The relevant marginal revenue of electricity sales as a function of labor employment is: MR(L) = 100,000 - 28.57 L. The marginal product of labor in electricity production is 0.01. Mr. Barnes is a price taker in the labor employment market, and the market price of labor is $15. Determine Mr. Barnes' optimal employment of labor.

Question

Quizplus · Accepted Answer

The Answer of Mr. Barnes has a monopoly in the production of electricity in the local market. The relevant marginal revenue of electricity sales as a function of labor employment is: MR(L) = 100,000 - 28.57 L. The marginal product of labor in electricity production is 0.01. Mr. Barnes is a price taker in the labor employment market, and the market price of labor is $15. Determine Mr. Barnes' optimal employment of labor.

Mr Barnes Has a Monopoly in the Production of Electricity