Question 7 Not yet answered Points out of 1 r Remove flag Table: Mr. B\'s Restau

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Question 7 Not yet answered Points out of 1 r Remove flag Table: Mr. B's Restaurant Number of Increase in revenue cooks from hiring an additional cook (per hour) $120 80 35 15 The second column in this table shows the firm'sAt a wage of $28 an hour, Mr. B should hire cooks. Select one: O a" marginal product of labor; 3 O b. marginal disutility of work 2 O c. marginal disutility of work: 4 o d. marginal cost of labor: 3 Question 8 Not yet answered Points out of 1 r Remove flag (This question refers to the MRU video Maximizing Profit under Monopoly) Which of the following describes the main difference in the market outcome for a monopolist versus a competitive firm? Select one: ? a. For a competitive firm, P >: MC, but for a monopolist, p-MC. O b. For a competitive firm. P < MC, but for a monopolist, P >: MC. O c. For a competitive firm, P-MC, but for a monopolist, P &t; MC. O d. For a competitive firm, P-MC, but for a monopolist, P > MC.

Explanation / Answer

Question 7

A.

The marginal product of labor is the increase in revenue resulting from hiring an additional worker. This is the marginal benefit. The marginal cost is the market wage. A profit-maximizing firm will hire up to the point where value of marginal product equals marginal cost.

Market wage is $28 per hour. Up to 3 cooks , MR > MC, $35>$28, so Mr. B will hire 3 cooks.

Question 8

C.

Profit maximization for a competitive firm occurs when P=MC, where P=MR.

For a monopolist P is greater than MC since he has market power and faces a downward sloping demand curve.

Number of cooks Increase in revenue from hiring an additional cook (per hour) $ 1 120 2 80 3 35 4 15

Market wage is $28 per hour. Up to 3 cooks , MR > MC, $35>$28, so Mr. B will hire 3 cooks.

Question 8

C.

Profit maximization for a competitive firm occurs when P=MC, where P=MR.

For a monopolist P is greater than MC since he has market power and faces a downward sloping demand curve.

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