Question

1. In the traditional labor model, the amount that an additional worker hired adds to the revenues of the firm is called the _________of labor.

a. marginal physical product

b. maximum revenue price

c. marginal revenue product

d. marginal fractional cost

ii. Compared to a perfectly competitive market, a monopolist faces a relatively inelastic market demand curve.

True or False

Answer 1

1. The correct answer is marginal physical product.

The marginal physical product of labor is the change in the quantity of total physical product resulting from a unit change in a variable input, keeping all other inputs unchanged or we can say the change in the output or total product because of hiring an additional unit of labor. Therefore, Option A is correct.

2. True because the monopolist's demand curve is perfectly inelastic as when a monopolist lowers price to sell more output, the lower price applies to all units sold.