Firm Alpha is a monopsonist in the labor market. The firm’s marginal value of labor is MVL = 105 - 3L. The labor supply is LS = 0.5w. The monopsonist uses its market power to maximize its own profit. The monopsonist hires L= workers and pays a wage w=. The deadweight loss in this market is DWL=

Firm Alpha is a monopsonist in the labor market. The firm’s marginal value of labor is MVL = 105 - 3L. The labor supply is LS = 0.5w. The monopsonist uses its market power to maximize its own profit. The monopsonist hires L= workers and pays a wage w=. The deadweight loss in this market is DWL=

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter11: Labor Markets

Section: Chapter Questions

Problem 19SQ

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Question

Firm Alpha is a monopsonist in the labor market.

The firm’s marginal value of labor is MV_L = 105 - 3L.

The labor supply is L^S = 0.5w.

The monopsonist uses its market power to maximize its own profit. The monopsonist hires L= workers and pays a wage w=. The deadweight loss in this market is DWL=.

Definition Definition Cost to society created by market inefficiency when supply and demand are not in market equilibrium.

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