Use the following table to answer questions 4-8. Columns (1) and (2) show the sh

Question

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.

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)?

1 2 3 4 5 Labor/week Output/week Price MRP ARP 0 0 xx 1 50 20 2 110 18 3 150 16 4 180 15 5 200 14 6 210 13

Explanation / Answer

1.

3.

to firm to operate marginal revenue product must be greater than marginal cost of extra labour.MRP is greater till 4 labour so firm will employ 4per week to produce 180 units.

4. 180 units.

5. profit = total revenue- total cost

=PQ-Total labour cost -total fixed cost

=2700 - 600-1800

=300

1 2 3 4 5 Labor/week Output/week Price MRP ARP Revenue MC 0 0 xx 1 50 20 1000 1000 1000 150 2 110 18 980 990 1980 150 3 150 16 420 800 2400 150 4 180 15 300 675 2700 150 5 200 14 100 560 2800 150 6 210 13 -70 455 2730 150

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.