Suppose a Firm Has One Variable Input, Labor

question 105

Multiple Choice

Suppose a firm has one variable input, labor. Why is the MRP_L curve for a competitive firm above the MRP_L curve for a monopolist?

• A) Without competition from other firms, monopolies are less efficient and the marginal product of labor is lower at each level of output.
• B) Although the marginal product of labor may be the same under both market structures, the marginal revenue of the monopoly declines with output.
• C) Monopolists have less incentive to invest in worker training and other methods for improving labor productivity, so the marginal product of labor is lower in the monopoly case.
• D) none of the above