A Monopolist Produces a Good Using Only One Factor, Labor

question 5

Multiple Choice

A monopolist produces a good using only one factor, labor.There are constant returns to scale in production, and the demand for the monopolist's product is described by a downward-sloping straight line with slope 21.The monopolist faces a horizontal labor supply curve.If the monopolist chooses output to maximize profits, then the marginal

• A)cost of labor to the monopolist exceeds the wage.
• B)product of labor times the price of output equals the wage.
• C)product of labor times the price of output is less than the wage.
• D)product of labor times the price of output exceeds the wage.
• E)revenue product of labor is less than the wage.

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Definitions:

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as part of retirement strategy.

Lottery

A form of gambling or a game of chance where participants buy tickets for a chance to win prizes, often financial in nature.

Return

The gain or loss on an investment over a specific period, represented as a percentage of the investment’s cost.

Ordinary Annuity

An annuity where the payment or receipt occurs at the end of each period, such as bonds or leases that make consistent payments.