Suppose that a monopoly firm finds that its MR is $50 for the first unit sold each day, $49 for the second unit sold each day, $48 for the third unit sold each day, and so on. Further suppose that the first worker hired produces 5 units per day, the second 4 units per day, the third 3 units per day, and so on. What is the firm's MRP for each of the first five workers?

The correct answer to the following question is that the MRP for the 1st worker - $240, 2nd worker - $174, for 3rd worker - $120, 4th worker - $75 and for the 5th worker is $36.

Explanation:

It is given that for a monopoly firm, the 1st unit it sells each day is for $50 and for each second it is $49 and so on. Also the first worker hired will produce 5 units a day, second would produce 4 units a day and so on.

So for finding the MRP - Change in revenue / Change in labor

1 st worker - $50 + $49 + $48 + $47 + $46 / $1

= $240

2nd worker - $45 + $44 + $43 + $42 / $1

= $174

3 rd worker - $41 + $40 + $39 / $1

= $120

4th worker - $38 + $37 / $1

= $75

5th worker - $36