In this problem, we analyze production planning in two diffe…
In this problem, we analyze production planning in two different types of widget markets. In one city, widget production is split across many different manufacturers: these firms are in perfect competition with one another. Here, marginal revenue per widget is constant at $4 (displayed on the left half of the marginal revenue column below). In another city, a single firm handles widget production, and constitutes a monopoly. Marginal revenue is decreasing, as shown in the right half of the marginal revenue column below. # of workers total product marginal revenue 1 12 $4 / $4 2 22 $4 / $4 3 31 $4 / $3 4 38 $4 / $3 5 44 $4 / $2 6 48 $4 / $2 7 51 $4 / $1 8 52 $4 / $1 Let the wage in both markets be $18. How many workers does the firm in perfect competition hire? . What are total profits? $. How many workers does the monopolist hire? . What are total profits? $.