In the long run, a competitive firm has a marginal product of ...

[lak]

In the long run, a competitive firm has a marginal product of labor, MPL = L-1. The output price is 20 per unit and the wage is 7.25 per hour. The long-run labor demand curve for the firm is
 
  A) 20L-0.05.
  B) 7.25L-0.05.
  C) 20L-1.
  D) 7.25L-1.

Question 2

Because of market power, wages are higher under monopsony than under competitive conditions.
 
  Indicate whether the statement is true or false

[Pamela.irrgang@yahoo.com]

Answer to Question 1

C

Answer to Question 2

False. Because of market power, the monopsonist pays a lower wage than is paid in a competitive market.