Edna Has a Monopoly in the Sale of Engineering Services

question 13

Essay

Edna has a monopoly in the sale of engineering services in the local market. Also, Edna is the only employer of high skilled labor in the local market. The marginal product of labor is: (L) = 250.
The marginal revenue of engineering services is:
MR(L) = 12,000 - 0.25L
The local supply of high skilled labor is:
L^S (w) = 200w - 10,000
Or equivalently
w = 50 + 0.005L^S
This implies Edna's marginal high-skill labor wage bill expenditures is:
ME(L) = 50 + 0.01L
Determine Edna's optimal level of employment. Also, what is the wage rate Edna pays for a unit of high skilled labor? What is the marginal revenue of the product of labor at the optimal employment level? Suppose Edna acted as a wage taker in determining high-skilled labor employment. How much labor would she hire and at what wage rate? At this level of employment, calculate the marginal revenue of the product of labor.

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Definitions:

Credits

Credits are accounting entries that increase liabilities or equity accounts, or decrease asset or expense accounts.

Trial Balance

A list of all general ledger accounts and their balances at a particular time, ensuring that debits equal credits in the double-entry accounting system.

Normal Balances

The side (debit or credit) of an account that is expected to have a higher balance given the account type's role in accounting.