Multiple Choice
The frangle industry is a monopoly, with a demand curve 100 - p, where p is the price of frangles.It takes one unit of labor and no other inputs to produce a frangle.The Frangle-Makers Guild is a strong union.The guild sets a wage and prevents anyone from working for less than that wage.The frangle monopoly must pay that wage but can hire as much labor as it chooses to.If the guild chooses a wage so as to maximize the total earnings (wage times number of units of labor hired) of frangle makers, then
A) the price of frangles will be $50.
B) the price of frangles will be $25.
C) the price of frangles will equal the wage rate.
D) the wage rate will be $25.
E) the wage will be $50.
Correct Answer:
Verified
Correct Answer:
Verified
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