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Economics Model Answers Eleven (view source)
Revision as of 04:34, December 4, 2019
, 04:34, December 4, 2019→top: Spelling, grammar, and general cleanup, typos fixed: ’s → 's
A monopoly shuts down in the short run if AVC>P, and it shuts down in the long run if ATC>P.
A monopoly shuts down in the short run if AVC>P, and it shuts down in the long run if ATC>P.
'''7. Sharon has to pay $10.50 to hire nine workers, and must increase the wage to $11 to hire a tenth worker. But the tenth worker will bring in $13 extra to the firm’s revenue. Does Sharon hire the tenth worker?'''
'''7. Sharon has to pay $10.50 to hire nine workers, and must increase the wage to $11 to hire a tenth worker. But the tenth worker will bring in $13 extra to the firm's revenue. Does Sharon hire the tenth worker?'''
No, because the marginal factor cost of hiring the tenth employee is $11 for that worker, and also $.50 times 9 to increase the wages of all the other workers. This totals $15.50, which is greater than the $13 in additional revenue. Sharon would lose money by doing this, so she should not do it.
No, because the marginal factor cost of hiring the tenth employee is $11 for that worker, and also $.50 times 9 to increase the wages of all the other workers. This totals $15.50, which is greater than the $13 in additional revenue. Sharon would lose money by doing this, so she should not do it.