Question

A monopoly firm hires workers in a perfectly competitive labor market in which the market wage rate is $\backslash (20$ per day. If the firm maximizes profit, and if the marginal revenue from the last unit of output produced by the last worker hired equals $\backslash )10$, what is the marginal product of that worker?

Short answer

The Marginal product of the worker is $\$20$when the market wage rate is$\$20$per day.

Step-by-step solution

Introduction.

The amount of revenue gained from selling one more unit is referred to as marginal revenue.

The cost of selling one more unit is referred to as the marginal cost. If marginal revenue was greater than marginal cost, selling one more unit would generate more revenue than it would cost.

Given Information.

The Information are given to find marginal product of the worker,

Market wage rate is $\$20$per day.

last unit of output produced by the last worker hired equals$\$10$

Find the Marginal product.

The marginal physical product is calculated by taking the marginal revenue and the marginal revenue product into account.

The marginal physical product is calculated by dividing the marginal revenue product by the marginal revenue.

Wage equals marginal revenue product. As a result, the worker's marginal physical product is

$$\begin{gathered} =(20/10) \\ =2 \end{gathered}$$.