A monopsonist has the production function Q = 4· L and faces the following labor supply and product demand equations respectively. W = 2 + 0.05 · L P = 10 – 0.025 · Q How much labor should the firm hire in order to maximize profits if they mark their price 300% above marginal cost?

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Q: The demand for labor for a firm with market power in the output market equals ______.

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A: Since you have asked multiple question we will solve first question for you.

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Q: function Q(L)=20L-L2. Its wage rate function is w=40+2.5L

A: *Answer:

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A: The correct answer is given in the second step.

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Q: Can a monopsony exercise monopsony power if the supply curve it faces is horizontal? Why or why not?

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A: The answer is - wage rate

Q: The more elastic the labour supply is, the smaller the wage paid by a monopsonist. True False

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Q: is horizontal?

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