A profit-maximizing monopolist hires workers in a perfectly competitive labor market.
Employing the last worker increased the firm's total weekly output from 110 units to 111 units and caused the firm's weekly revenues to rise from $25 comma 250
to $25 comma 875
.
What is the current prevailing weekly wage rate in the labor market?$---.
.
To determine the current prevailing weekly wage rate in the labor market, we first need to calculate the marginal revenue product (MRP) of the last worker hired.
The MRP is equal to the change in total revenue divided by the change in the quantity of labor. It represents the additional revenue generated by hiring one additional unit of labor.
Change in total revenue = $25,875 - $25,250 = $625
Change in quantity of labor = 111 units - 110 units = 1 unit
MRP = $625 / 1 unit = $625
The prevailing weekly wage rate is equal to the MRP. Therefore, the current prevailing weekly wage rate in the labor market is $625.