ECON 2030 Lecture Notes - Lecture 11: Perfect Competition, Monopolistic Competition, Market Structure
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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 | - | Ā | Ā |
1 | 50 | 20 | Ā | Ā |
2 | 110 | 18 | Ā | Ā |
3 | 150 | 16 | Ā | Ā |
4 | 180 | 15 | Ā | Ā |
5 | 200 | 14 | Ā | Ā |
6 | 210 | 13 | Ā |
Ā |
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)?