Suppose that the Ebay warehouse behaves as a monopsonist in the local labor market. Assume that its labor supply curve is w(LS) = 4LS and its labor demand curve is w(LD ) = 42.8−2LD. To maximize its profits: a. how many units of labor will Ebay hire and b. what wage will Ebay pay? Now suppose that the local labor union goes on strike and Ebay is eventually forced to increase the pay of its workers to a competitive wage. What wage would Ebay then have to pay? c. Find competitive wage
Suppose that the Ebay warehouse behaves as a monopsonist in the local labor market. Assume that its labor supply curve is w(LS) = 4LS and its labor demand curve is w(LD ) = 42.8−2LD. To maximize its profits: a. how many units of labor will Ebay hire and b. what wage will Ebay pay? Now suppose that the local labor union goes on strike and Ebay is eventually forced to increase the pay of its workers to a competitive wage. What wage would Ebay then have to pay? c. Find competitive wage
Chapter16: Labor Markets
Section: Chapter Questions
Problem 16.5P
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Question
Suppose that the Ebay warehouse behaves as a monopsonist in the local labor market.
Assume that its labor supply curve is w(LS) = 4LS and its labor demand curve is w(LD ) = 42.8−2LD.
To maximize its profits:
a. how many units of labor will Ebay hire and
b. what wage will Ebay pay?
Now suppose that the local labor union goes on strike and Ebay is eventually forced to increase the pay of its workers to a competitive wage. What wage would Ebay then have to pay?
c. Find competitive wage
The correct answers are:
a. 4.28
b. 17.12
c. 28.52
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