EBK MICROECONOMICS
5th Edition
ISBN: 9781118883228
Author: David
Publisher: YUZU
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Question
Chapter 11, Problem 11.32P
To determine
The magnitude of the marginal revenue product of labor in relation to the wages paid to workers currently.
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A firm produces output, measured by Q, which is sold in a market in which the price P = 20, regardless of the size of Q. The output is produced using only one input, labor (measured by L); the production function is Q(L) = L. There are many suppliers of labor, and the supply schedule is w = 2L, where w is the wage rate. The firm is a monopsonist in the labor market.
What wage rate will the monopsonist pay?
How much extra profit does the firm earn when it pays labor as a monopsonist
instead of paying the wage rate that would be observed in a perfectly competitive
If the sole employer in a market is a monopsonist, the equilibrium number of workers hired will be ___ and the equilibrium wage will be ___ than they would be in a perfectly competitive market.
a.Higher; higher
b.Lower; higher
c.Higher; lower
Which of the following is true?
When the marginal cost is greater than the average cost, there are economies of scale.
The average expenditure of a monopsonist is decreasing in the quantity purchased.
None of the other statements if true.
Positive accounting profits in a long-run competitive equilibrium reflect economic rents from scarce factors of production.
Chapter 11 Solutions
EBK MICROECONOMICS
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Similar questions
- Is there a deadweight loss if a firm produces the quantity of output at which price equals marginal cost? Explain.arrow_forwardT/F Monopoly market is a macroeconomic concept.arrow_forwardThe ultimate determinant of monopoly power is the firm’s elasticity of demand. What three factors determine a firm’s elasticity of demand? Explain this in the context of a South African example of a monopoly. How should a monopsonist decide how much of a product to buy? Will it buy more or less than a competitive buyer? Explain.arrow_forward
- If the sole employer in a market is a monopsonist, the equilibrium number of workers hired will be ___ and the equilibrium wage will be ___ than they would be in a perfectly competitive market. a.Higher; higher b.Lower; higher c.Higher; lower d.Lower; lowerarrow_forwardTake an monopsony with an inverse demand of P = 20-.5Q equal to marginal revenue and inverse supply of P = 2+.25Q equal to marginal cost. Find the equilibrium price, quantity, all 3 surpluses, and any deadweight loss. Show your work. Request: Please draw a graph as needed and please provide the typed answer (not written) Your help is much appreciated!arrow_forwardFor a monopoly, marginal revenue is less than price because? the demand for the firm's output is perfectly elastic. the firm can sell all of its output at any price. the demand for the firm's output is downward sloping. the firm has no supply curve.arrow_forward
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