Author Question: If a firm finds itself operating in Stage I, it implies that A) variable inputs are extremely ... (Read 55 times)

bclement10

  • Hero Member
  • *****
  • Posts: 560
If a firm finds itself operating in Stage I, it implies that
 
  A) variable inputs are extremely expensive.
  B) it overinvested in fixed capacity.
  C) it underinvested in fixed capacity.
  D) fixed inputs are extremely expensive.

Question 2

Suppose a monopoly producer is also a monopsonist in the labor market. Demand for the output is p = 100 - Q. The production function is Q = L, and the labor supply curve is w = 10 + L. How much labor does the firm hire? What wage is paid?
 
  What will be an ideal response?



manuelcastillo

  • Sr. Member
  • ****
  • Posts: 304
Answer to Question 1

B

Answer to Question 2

The firm's marginal revenue product of labor is MRP = 100 - 2L. Marginal expenditure is 10 + 2L. Setting them equal yields 10 + 2L = 100 - 2L or L = 90/4 = 22.5 units of labor, for which the firm will pay a wage of (10 + L) = 32.5.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Although not all of the following muscle groups are commonly used, intramuscular injections may be given into the abdominals, biceps, calves, deltoids, gluteals, laterals, pectorals, quadriceps, trapezoids, and triceps.

Did you know?

Asthma-like symptoms were first recorded about 3,500 years ago in Egypt. The first manuscript specifically written about asthma was in the year 1190, describing a condition characterized by sudden breathlessness. The treatments listed in this manuscript include chicken soup, herbs, and sexual abstinence.

Did you know?

Never take aspirin without food because it is likely to irritate your stomach. Never give aspirin to children under age 12. Overdoses of aspirin have the potential to cause deafness.

Did you know?

Dogs have been used in studies to detect various cancers in human subjects. They have been trained to sniff breath samples from humans that were collected by having them breathe into special tubes. These people included 55 lung cancer patients, 31 breast cancer patients, and 83 cancer-free patients. The dogs detected 54 of the 55 lung cancer patients as having cancer, detected 28 of the 31 breast cancer patients, and gave only three false-positive results (detecting cancer in people who didn't have it).

Did you know?

The average human gut is home to perhaps 500 to 1,000 different species of bacteria.

For a complete list of videos, visit our video library