Consider a firm that is a monopolist in its output market and a monopsonist in the market for labor, the only input, The elasticity of demand for a firms good is -2 and the elasticity of supply for labor 4. Then, the revenue marginal product of labour exceeds the wages by I (insert a number) percent. At the monopoly outcome, the consumers willingness-to-pay for additional output exceeds the marginal cost of production by (insert a number) percent.

Consider a firm that is a monopolist in its output market and a monopsonist in the market for labor, the only input, The elasticity of demand for a firms good is -2 and the elasticity of supply for labor 4. Then, the revenue marginal product of labour exceeds the wages by I (insert a number) percent. At the monopoly outcome, the consumers willingness-to-pay for additional output exceeds the marginal cost of production by (insert a number) percent.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 29CTQ: Imagine that you ale managing a small firm and thinking about entering the market of a monopolist....

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Consider a firm that is a monopolist in its output market and a monopsonist in the market for labour, the only input. The elasticity of demand for a firms good is -2 and the elasticity of supply for labor 4. What percentage does the revenue marginal product of labour exceed the wage paid by this firm by?
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Figure: Natural Monopoly Price BO --a DO FO G АС MC MR Demand K LM N Quantity When consumer surplus is maximized, price is and quantity is H; N F; M D; K B; K 000