A firm producing compact discs reports the following production information:
# of Workers Total Product
(boxes of CDs per hour)
0 0
1 125
2 225
3 305
4 365
5 405
6 425
The compact discs sell in a competitive market at a price of $0.20 per box. The firm hires workers in a competitive labor market at a wage of $12 per hour. The firm is currently hiring four workers and is considering hiring a fifth worker. What would you recommend the firm do? Why?
I would suggest that the firm not hire the fifth worker because his marginal revenue product will be $8 (40 ? $0.20) and this is less than the market wage rate. Therefore, the firm would lower its profits if it hired the fifth worker.
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The profit-maximizing quantity of the monopolist compared to the perfectly competitive industry in the above figure are, respectively
A) Q1 and Q2. B) Q1 and Q3. C) Q1 and Q5. D) Q2 and Q3.
Intellectual property
a. requires copyright protection that is expensive to obtain, but cheap to enforce b. usually ends up being owned by the government c. is costly to produce, but can be transmitted at low cost d. cannot be owned by anyone e. is usually located on college campuses