A profit-ximizing monopolist firm in product market and competitive in lab
wage rate
Less than the worker's MRP
Equal to the worker's MRPL
A. Equal to the worker's VMP 8. Greater than the worker's VMP
5. Suppose that a firin's production function is given by Q=20L-21. If the
wage rate is $10 per hour, the firm's profit-maximizing level of labor employment would be:
First, we need to find the marginal revenue product of labor (MRPL) at each level of labor employment. The MRPL is equal to the marginal product of labor (MPL) multiplied by the market price of the output. In this case, the MPL is the derivative of the production function with respect to labor (L), which is 20. The market price of the output is not given, so we cannot find the exact MRPL.
However, we can still compare the wage rate to the worker's VMP (Value Marginal Product) to determine if it is less than, equal to, or greater than the wage rate. The VMP is calculated by multiplying the MPL by the price of the output. Since we don't have the exact price of the output, we cannot determine the worker's VMP.
Therefore, we cannot determine if the wage rate is less than, equal to, or greater than the worker's MRP or VMP without more information or assumptions.
wage rate (w) is less than the worker's Marginal Revenue Product (MRP), the profit-maximizing monopolist firm will hire more workers.
When the wage rate is less than the worker's MRP, it means that the firm pays the workers less than the value they contribute to the firm's revenue. In this case, the cost of hiring an additional worker (w) is less than the additional revenue generated by that worker (MRP). As a profit-maximizing firm, it would be in the firm's best interest to hire more workers until the wage rate equals the worker's MRP.
The wage rate being equal to the worker's Marginal Revenue Product of Labor (MRPL) is another possibility, but it does not necessarily indicate the profit-maximizing level of employment. The MRPL represents the additional revenue generated by an additional unit of labor. If the wage rate equals the worker's MRPL, it means that the firm is paying the workers exactly what they contribute to the firm's revenue. The firm could still choose to hire more workers if their MRP exceeds their wage rate, as this would lead to additional profit.
On the other hand, if the wage rate is greater than the worker's Value of Marginal Product (VMP), the firm would not hire more workers, as it would be paying the workers more than the value they contribute to the firm's revenue. The firm would not be able to maximize profits under these conditions.