Question

1. The table below shows the marginal product of labor at various employment levels. Assume this firm is a monopoly, and the marginal revenue is in the table below.

Labor	Marginal Product of Labor	Marginal Revenue
1	10	20
2	8	14
3	7	10
4	5	8
5	3	4
6	1	2

                                                   

1. What is the marginal revenue product of labor at each level of labor?
2. If the firm operates in a perfectly competitive labor market where the going market wage is $20, what is the firms profit maximizing level of employment?
3. Assume the monopoly acquires new capital that doubles the productivity of each worker, such that the marginal product of labor is twice the original value.  If the firm operates in a perfectly competitive labor market where the going market wage is $20, what is the firms profit maximizing level of employment?

2. The table below shows the share of income going to each quintile of the income distribution for Sweden in 2015 and 2004 (Data from the World Bank).  Use this data to calculate what the points on a Lorenz curve would be, and sketch the Lorenz curve.  Clearly provide the data points for your Lorenz curves in a table. How did inequality in Sweden shift over this time period?  How can you see the patterns in the quintiles in the Lorenz curve?

Share of Income	2015	2004
Top Quintile	37.6%	35.5%
Fourth Quintile	22.8%	22.9%
Middle Quintile	17.6%	17.9%
Second Quintile	13.8%	14.4%
Bottom Quintile	8.2%	9.3%

3. Public goods are often thought to be goods or services that are provided by the government, but that is confusing cause and effect.
   1. What are the characteristics of a public good?
   2. What is an example of a good that is often provided by the government but is NOT a public good?
   3. What is an example of a good that is often provided by the government and IS a public good?
   4. What is an example of a good that is rarely provided by the government and IS a public good?
   5. Consider open educational resources (OER), for example, open textbooks (such as the book for this class provided free through OpenStax). These are available free online from companies like OpenStax College and Lumen Learning. Is OER a public good?

Answer 1