Question

A profit-maximizing monopolist hires workers in a perfectly competitive labor market. Employing the last worker increased the firm's total weekly output from $110$ units to $111$ units and caused the firm's weekly revenues to rise from $\backslash (25,000$ to $\backslash )25,750$. What is the current prevailing weekly wage rate in the labor market?

Short answer

The current prevailing weekly wage rate in the labor market is$\$750$

Step-by-step solution

Introduction.

The prevailing wage rate is the average wage paid to similarly employed people in a specific occupation in the intended employment area.

Given Information.

The following information are given to find current prevailing weekly wage rate:

Total firm's output$=110$to $111$units.

Firm's weekly revenues$=\$25,000$to$\$25750$

Step3:

The wage rate is equal to the change in revenue divided by the change in output. The output is raised from $110$to $111$units.

As a result, the output increased by $1$unit $(111-110=1)$per week.

This increased output causes the firm's weekly revenue to rise from $\$25,000$to $\$25,750.$

As a result, revenue increased by$\$750$per week.

$(25,750-25,000=750)$

As a result, the labour market's weekly wage rate is,

$$\begin{gathered} =(750/1) \\ =750. \end{gathered}$$