Use the following table to answer questions 4-8. Columns (1) and (2) show the short-run production function for a monopolist using a single variable input, labor. Columns (2) and (3) show the demand schedule. Total fixed cost is $1,800.
1
2
3
4
5
Labor/week
Output/week
Price
MRP
ARP
0
0
-
1
50
20
2
110
18
3
150
16
4
180
15
5
200
14
6
210
13
1. Calculate the MRP for each level of labor usage.
2. Calculate the ARP for each level of labor usage.
Assume the weekly wage is $150,
3. How much labor will the firm use?
4. How much will it produce?
5. What is the firm's profit (loss)?
Use the following table to answer questions 4-8. Columns (1) and (2) show the short-run production function for a monopolist using a single variable input, labor. Columns (2) and (3) show the demand schedule. Total fixed cost is $1,800.
| 1 | 2 | 3 | 4 | 5 |
| Labor/week | Output/week | Price | MRP | ARP |
| 0 | 0 | - | ||
| 1 | 50 | 20 | ||
| 2 | 110 | 18 | ||
| 3 | 150 | 16 | ||
| 4 | 180 | 15 | ||
| 5 | 200 | 14 | ||
| 6 | 210 | 13 |
|
1. Calculate the MRP for each level of labor usage.
2. Calculate the ARP for each level of labor usage.
Assume the weekly wage is $150,
3. How much labor will the firm use?
4. How much will it produce?
5. What is the firm's profit (loss)?
Related textbook solutions
Related questions
Suppose a firm in a competitive industry faces an equilibrium product price of $2 per unit of output. Table A provides information on the output produced by various amounts of labor. Use this information to complete the remaining columns of Table A, and to fill in the labor demand schedule in Table B.
Table A: Production Schedule Units of Labor Total Product
| Units of Labor | Total Product | AP | MP | MRP |
| 0 | 0 | |||
| 1 | 13 | |||
| 2 | 25 | |||
| 3 | 34 | |||
| 4 | 42 | |||
| 5 | 46 | |||
| 6 | 48 |
(a) Complete Table A, where AP is the average product of labor, MP is the marginal product of labor, MRP is the marginal revenue product of labor.
(b) Briefly explain why the marginal revenue product of labor (MRP) will be equal to the value of the marginal product of labor (V MP) in this market
| Wage Rate | Quantity Demanded |
| 24 | |
| 16 | |
| 8 |
(c) Complete Table B, with the labor demand schedule for this firm at different wage rates.
(d) If the equilibrium market wage rate is $8, what is the equilibrium quantity of labor hired by the firm?
Fabric, Inc., owns a shoe factory and hires workers in a competitive labor market. The fabric required to make each pair of shoes costs $5. The company's weekly output of finished jeans varies with the number of workers hires, as shown below:
Number of workers Jeans (pairs/week)
0 0
1 25
2 45
3 60
4 72
5 80
6 85
1. If the shoes sell for $35 a pair and the competitive market wage is $250 per week, how many workers should Fabric hire? How many pairs of shoes will the company produce each week?
Complete the Table:
|
Q labor |
TPP |
MPP |
Price |
TRev |
MRP/VMP |
Labor Cost |
Material Cost |
Total Cost |
MRC |
Profit |
