A monophony can appoint one worker at the wage of $5, two workers at the wage of $6 each, three workers at a $7 each, and so on (each added worker adding 1dollar to the wage rate). If the marginal revenue product for all workers is $16, what wage will it pay (i.e., the same as determining how many workers will firm hire)? Hint: Compute the MEL and compare it to MRPL.
Assume, the government needs lifeguards to buy $1 of health insurance per hour worked. What takes place to employment and wages of lifeguards? Describe and demonstrate graphically.