Multiple Choice
The bauble industry is competitive with free entry. There is a fixed-coefficient technology. One unit of labor and one unit of plastic are required for each bauble. Workers in the bauble industry must all belong to the Bauble-Makers Union. The union sets the wage that will be paid to all bauble makers. The price of plastic is 10 dollars per unit and the demand function for baubles is 1,000 - 10p. Long-run equilibrium requires that the price of baubles equals the cost of production. The wage per unit of labor that maximizes total revenue of workers is
A) 100 dollars.
B) 10 dollars.
C) 45 dollars.
D) 20 dollars.
E) infinity.
Correct Answer:
Verified
Correct Answer:
Verified
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