What does a monopolist's demand curve for labor look like? How does it compare to the market demand curve for a competitive industry? What does the supply curve of labor to a monopolist look like? Explain
What will be an ideal response?
The demand curve for labor for a monopoly is downward sloping because of the law of diminishing marginal product. The marginal revenue product curve falls faster in the case of monopoly than in perfect competition because marginal revenue falls faster than price falls as more units are sold. So, the monopoly will tend to hire fewer workers than if the industry was competitive. This is consistent with the fact that monopolies restrict output. The supply curve facing a monopoly is horizontal because the monopoly is still a price taker in input markets.
You might also like to view...
Juanita goes to the Hardware Emporium to buy a new circular saw. She is willing to pay $120 for a new saw, but buys one on sale for $85. Juanita's consumer surplus from the purchase is
A) $35. B) $85. C) $120. D) $205.
If the public decides to hold less currency and more deposits in banks, bank reserves
a. decrease and the money supply eventually decreases. b. decrease but the money supply does not change. c. increase and the money supply eventually increases. d. increase but the money supply does not change.
During an economic contraction, housing and stock prices generally
a. fall, leading to a reduction in aggregate demand. b. fall, leading to an increase in aggregate demand. c. rise, leading to a reduction in aggregate demand. d. rise, leading to an increase in aggregate demand.
The profit-maximizing promoter will
A. sell less than the capacity of the facility regardless of price. B. sell a number of tickets equal to the capacity of the facility regardless of the price. C. sell that number of tickets where the marginal cost equals the marginal revenue. D. sell more than capacity regardless of price.