LABOR ECONOMICS LOOSE PRINT UPGRADE
20th Edition
ISBN: 9781264115211
Author: BORJAS
Publisher: MCG
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Question
Chapter 10, Problem 11P
(a)
To determine
Identify the letter that represents the bargaining power of the union.
(b)
To determine
Identify the portion of contract curve that expect the bargained wage employment contract to occur.
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c) The diagram below shows the supply, demand and marginal expense curve for labor in a
monopsony. Given this information, answer the following questions:
Wage
1)
ii)
111)
iv)
3
A
B
C
E
H
ME
S
Labor hours
per week
What quantity of labour will a monopsonist employ?
Which region represents the monopsonist total expense for labour?
If there were no monopsony, and write an expression using the letter above to
represent how much will the total expense of labour increase by.
Give a realistic example of a monopsony.
1, Wage determination in a monopsonistic labor market.
A) Draw the demand, supply, and marginal resource cost curves for labor for a monopsonist
operating in a perfectly competitive product market. Label your graph completely.
B) Where does the marginal resource curve lie in relationship to the supply curve? Explain
your answer.
C) On a second graph similar to part A of this question, label the equilibrium wage and
quantity if this firm were operating as firm in a competitive labor market (rather than a
monopsonistic labor market)
D) On a copy of the same graph, label the wage level the monopsonist would pay and the
quantity of labor the monopsonist would hire. Why does the monopsonist choose that wage
and quantity?
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
Chapter 10 Solutions
LABOR ECONOMICS LOOSE PRINT UPGRADE
Ch. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prob. 11RQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Major League Baseball players are not eligible for...Ch. 10 - Prob. 15P
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