Explain how marginal revenue product is derived. Why is the MRP curve also the firms' short-run...

Explain how marginal revenue product is derived. Why is the MRP curve also the firms' short-run
the demand curve for labor? Explain why and how the demand curve for labor differs between firms
operating in a competitive industry and an imperfectly competitive industry (i.e., monopoly).

Expert Solution

1. Marginal Revenue Product is the additional/marginal revenue that the firm has generated by employing one additional employee. It is derived by Multiplied by Marginal Product Of Labour by the price of the output. (The Marginal Product of Labour is the amount of output one additional worker can generate.)

Derivation of MRP = MPL × Price of Output

2. In a competitive, profit-maximizing firm hires workers up to the point where the MRP of labour equals wage. The MRP curve slopes downward because of the diminishing Marginal Product. Therefore, the downward sloping MRP is the labour demand curve in the short run.

3. The only difference between the demand curve for labour in the perfect and imperfect market is the consideration that under monopoly, the product price will fall as the firm will sell an additional unit of its product.

Rahul Sunny answered 9 months ago

a. Explain how marginal revenue curves are derived from total revenue curves. b. Explain why marginal...

a. Explain how marginal revenue curves are derived from total revenue curves. b. Explain why marginal revenue curves might slope downwards. c. Explain why marginal revenue curves might be horizontal.

Explain why the marginal product of labor diminishes in the short run (as more units of...

Explain why the marginal product of labor diminishes in the short run (as more units of labor are added to a fixed amount of a fixed factor like capital or land). Why does diminishing marginal product of labor (the variable factor) lead to increasing marginal cost of the product?

Please answer the below questions 1. Explain how the Marginal Revenue Product of Labor is derived...

Please answer the below questions 1. Explain how the Marginal Revenue Product of Labor is derived mathematically and explain what it means. 2. Explain the concept of Economic Rent and how it works with regard to wages. 3. Briefly explain how two interdependent markets move to general equilibrium. 4.. What does it mean when goods are allocated inefficiently and when they are allocated efficiently. 5. Briefly explain how to internalize positive and negative externalities.

Draw a long-run average cost curve, carefully explain how it is derived, and explain why it...

Draw a long-run average cost curve, carefully explain how it is derived, and explain why it has the shape that it has. Please show me your thought process. Please explain it as if you are telling it to someone who has no clue about economics.

1.What are the objectives of the competition act in Canada? 2.Explain the marginal revenue product (MRP)...

1.What are the objectives of the competition act in Canada? 2.Explain the marginal revenue product (MRP) for labour. 3.Explain how wage rates are determined. 4.Explain why there might be a wage difference between two jobs. What could reduce the wage differential? What barriers might prevent the differential from being reduced? 5.Explain how demand for labour is a derived demand. 6.What is are positive and negative externalities. Explain using examples for each. 7.Use a diagram to explain the impact on a...

Explain why the monopsonist's marginal-revenue-product curve is downward sloping. Include the role of the price for...

Explain why the monopsonist's marginal-revenue-product curve is downward sloping. Include the role of the price for the final good or service in your answer. I know that The monopsonist's marginal-revenue-product curve is downward sloping because of the law of diminishing returns, but how can tie back to the price for the final good or service?

Which of the following statement is true? The entire marginal cost curve becomes the firms short-run...

Which of the following statement is true? The entire marginal cost curve becomes the firms short-run supply curve. Market demand is infinitely elastic in all competitive industries. The average variable cost curve represents the short run supply curve for competitive firms. -- Normal profits are a cost of production. (I chose this one. Is this right?) Competitive firms can earn no economic profits during the short run period of time.

Explain the relationship between the marginal cost curve of an individual firm and the short run...

Explain the relationship between the marginal cost curve of an individual firm and the short run market supply curve in a perfect competition industry.

The short-run supply curve for a firm in a perfectly competitive industry is: The short-run marginal...

The short-run supply curve for a firm in a perfectly competitive industry is: The short-run marginal cost curve that is above minimum average variable cost (which takes into account the fact that the firm should shut down if price falls below average variable cost). The entire average variable cost. The entire short-run marginal cost curve. The entire average total cost curve. Which of the following statements is true regarding short-run and long-run costs? (Assume all cost curves have typical shapes,...

a)Why is the ATC U-Shaped? b)Why is marginal curve upward sloping in the short run ?...

a)Why is the ATC U-Shaped? b)Why is marginal curve upward sloping in the short run ? c)Where and why does the MC curve cross the ATC curve? d)Given values for ATC and AVC,how would you determine Fixed cost (what are the steps necessary to get from the first twoto the last one )? e)Given ATC,how would you determine total cost? f)Graphically show and verbaly explain what the general pattern of and relationship between fixed cost,variable cost and total cost as...

Question