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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

What determines the demand for labor for a firm with market power in the output market?

To determine

The factors that determine the demand for labor in case of a firm with market power in the output market is to be determined.

Explanation

In an imperfectly competitive output market, the demand for labor depends upon the marginal revenue product of labor. The marginal revenue product of labor can be calculated using the following formula:

  Marginal Revenue Product = MPL× MRwhere,MPL=Marginal product of LaborMR = Marginal Revenue

The marginal product of labor is the net addition to the total product when an additional labor unit is employed

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