Columns 1 and 2 make up a portion of a monopolist's production function for a single variable input,labor.Columns 2 and 3 represent the demand function facing the monopolist over this range of output: $\begin{array}{c}
\begin{array}{c}
(1)\
\text {Units of Labor}\
3 \
4 \
5 \
6 \
7
\end{array}
\begin{array}{c}
(2)\
\text {Units of Output}\
370 \
490 \
570 \
600\
620
\end{array}
\begin{array}{c}
(3)\
\text {Price}\
\$10\
9\
8\
7\
6
\end{array}
\end{array}$
If the monopolist faces a fixed wage rate of $300,how many units of labor will the firm employ?

Question

Columns 1 and 2 make up a portion of a monopolist's production function for a single variable input,labor.Columns 2 and 3 represent the demand function facing the monopolist over this range of output: $\begin{array}{c}
\begin{array}{c}
(1)\
\text {Units of Labor}\
3 \
4 \
5 \
6 \
7
\end{array}
\begin{array}{c}
(2)\
\text {Units of Output}\
370 \
490 \
570 \
600\
620
\end{array}
\begin{array}{c}
(3)\
\text {Price}\
\$10\
9\
8\
7\
6
\end{array}
\end{array}$
 If the monopolist faces a fixed wage rate of $300,how many units of labor will the firm employ?

Quizplus · Accepted Answer

The monopolist will employ 4 units of labor because at this level of employment, the marginal revenue product of labor ($9) is equal to the wage rate ($300).

Columns 1 and 2 Make Up a Portion of a Monopolist's