Question

Suppose that a monopoly firm finds that its MR is $50 for the first unit sold each day, $49 for the second unit sold each day, $48 for the third unit sold each day, and so on. Further suppose that the first worker hired produces 5 units per day, the second 4 units per day, the third 3 units per day, and so on. What is the firm’s MRP for each of the first five workers?

Answer 1

Answer:

The correct answer to the following question is that the MRP for the 1st worker - $240 , 2nd worker - $174 , for 3rd worker - $120, 4th worker - $75 and for the 5th worker is $36 .

Explanation:

It is given that for a monopoly firm, the 1st unit it sells each day is for $50 and for each second it is $49 and so on . Also the first worker hired will produce 5 units a day, second would produce 4 units a day and so on.

So for finding the MRP - Change in revenue / Change in labor

1 st worker - $50 + $49 + $48 + $47 + $46 / $1

= $240

2nd worker - $45 + $44 + $43 + $42 / $1

= $174

3 rd worker -  $41 + $40 + $39 / $1

= $120

4th worker - $38 + $37 / $1

= $75

5th worker - $36