Microeconomics For Today (MindTap Course List)
9th Edition
ISBN: 9781305507111
Author: Irvin B. Tucker
Publisher: Cengage Learning
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Question
Chapter 11, Problem 19SQ
To determine
Monopsonist’s equilibrium.
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Students have asked these similar questions
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; lower
How should a monopsonist decide how much of a product to buy? Will it buy more or less than a competitive buyer? Explain.
Consider a monopsonist that hires 4.28 units of labor at a wage of 19.26. If the marginal value placed on the last worker hired is 41.22
a.) what is the elasticity of labor supply for this monopsonist?
Chapter 11 Solutions
Microeconomics For Today (MindTap Course List)
Ch. 11.3 - Prob. 1YTECh. 11 - Prob. 1SQPCh. 11 - Prob. 2SQPCh. 11 - Prob. 3SQPCh. 11 - Prob. 4SQPCh. 11 - Prob. 5SQPCh. 11 - Prob. 6SQPCh. 11 - Prob. 7SQPCh. 11 - Prob. 8SQPCh. 11 - Prob. 9SQP
Ch. 11 - Prob. 10SQPCh. 11 - Prob. 11SQPCh. 11 - Prob. 1SQCh. 11 - Prob. 2SQCh. 11 - Prob. 3SQCh. 11 - Prob. 4SQCh. 11 - Prob. 5SQCh. 11 - Prob. 6SQCh. 11 - Prob. 7SQCh. 11 - Prob. 8SQCh. 11 - Prob. 9SQCh. 11 - Prob. 10SQCh. 11 - Prob. 11SQCh. 11 - Prob. 12SQCh. 11 - Prob. 13SQCh. 11 - Prob. 14SQCh. 11 - Prob. 15SQCh. 11 - Prob. 16SQCh. 11 - Prob. 17SQCh. 11 - Prob. 18SQCh. 11 - Prob. 19SQCh. 11 - Prob. 20SQ
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- Table 14.13 shows information from the supply curve for labor for a monopsonist, that is, the wage rate required at each level of employment. What is the monopsonists marginal cost of labor at each level of employment? If each unit of labors marginal revenue product is 13, what is the firms profit maximizing level of employment and wage?arrow_forwardWhich of the following is characteristic of a labor market that is a monopsony? Multiple Choice О The supply curve for labor lies above the marginal resource cost curve of the firm. О The type of labor available is relatively mobile from one industry to another. The firm's employment is a small portion of the total employment of that type of labor. The wage rate the firm must pay varies directly with the number of workers it employs.arrow_forwardThe more elastic the labour supply is, the smaller the wage paid by a monopsonist. True Falsearrow_forward
- Question 14 For a monopsonist, the marginal factor cost is always: equal to the wage rate. less than the wage rate. greater than the wage rate the same as the labor supply. the same as the labor demand. Question 17 A monopsonist will hire more workers than will be hired in a competitive labor market. True False Question 19 Which of the following statements is true about monopsony? c and e. c, d, and e. Monopsonists exercise complete buying power. Monopsonists maximize profit by setting MRP = MFC. Monopsonists face the whole labor supply curve Question 20 A decrease in the price of the output will decrease the firm's demand for labor. True Falsearrow_forward3. A monopsonist's inverse demand for labor can be written as D-'(w) = VMP(E) = 40 – 0.005ED. Labor is supplied to the firm according to the inverse supply function S-(w) s(E) = w = 5+ 0.01E3. %3Darrow_forward25. Consider the graph below. The profit-maximizing level of employment by the monopsonist in the labor market shown above will be: A. A B. B C. C D. D W MRC -SL * MRP 0 ABC D Quantity of Labor Larrow_forward
- What would happen if the labour market is dominated by a monopsonist, and the government sets a minimum wage that is above the competitive wage? please answer with graphsarrow_forwardB. Consider a firm who sells output at p=10 and has a short run production function Q(L)=20L-L2. Its wage rate function is w=40+2.5L. Suppose the firm is a monopsonist, how much labor will it hire to maximize profits?arrow_forwardA monopsonist's demand for labor can be written as VMPE = 40 – 0.005ED. Labor is supplied to the firm according to w = 5 + 0.01ES. Thus, the firm's marginal cost of hiring workers when it hires off of this supply schedule is MCE = 5 + 0.02ES. A. How much labor does the monopsony firm hire and at what wage when there is no minimum wage? B. How much labor does the monopsony firm hire and at what wage when it must pay a minimum wage of $25?arrow_forward
- A monopsonist's demand curve for labor is given by w= 15 – 2L, where w is the hourly wage rate and L is the number of person-hours hired. a. If the monopsonist's supply (AFC) curve is given by w= 1L, which gives rise to a marginal factor cost curve of MFC = 2L, how many units of labor will he employ and what wage will he pay? Instructions: Round your answer for labor to 1 decimal place. Round your answer for wage to the nearest penny (2 decimal places). Labor: Wage: $ b. How would your answers to part (a) be different if the monopsonist were confronted with a minimum wage bill requiring him to pay at least $7/hr? Instructions: Round your answer for labor to 1 decimal place. Round your answer for wage to the nearest whole number. Labor: Wage: $arrow_forwardJacob owns company that offers jeans in a perfectly competitive product market. Jacob is a monopsonist in the labor market, and the table below shows the wages necessary for workers to supply their labor to Jacob's firm. Total Wage Bill Marginal Wage Employment Wage (TWB) Cost (MWC) 1 20 30 3 40 4 50 60 Question A Calculate the firm's total wage bill and marginal wage cost in each empty cell for the table above. Question B Referring to the table above, by how much does profit change with the hiring of the fourth worker if the marginal revenue product of the fourth worker is $90? 24 Question C Referring to the table above, if minimum wage was implemented by the government and set at a wage of $50, how would profit change for hiring the fourth work with a marginal revenue product of $90? $ Question D Assume now that the demand for labor is linear and is such that the firm would be willing to hire 1 worker for $80, 2 workers for $70, and so on. Using only the supply information in the…arrow_forward3. A monopsonist's inverse demand for labor can be written as D-1(w) = VMP(E) 0.005ED. Labor is supplied to the firm according to the inverse supply function S-(w) s(E) = w = 5+0.01E,. = 40 – (a) Assume that it is a short-run problem and state the monopsonist's PMAX problem mathematically. (b) Define the monopsonist's cost and find the marginal cost. (c) How much labor does the monopsony firm hire? At what wage rate does it hire workers? (d) How much labor would the monopsonist approximately hire if it hired as if a perfectly competitive firm does? At what wage rate would it hire workers approximately? (e) Draw a graph. (f) Approximately calculate producer surplus (PS), worker surplus (WS), and dead weight loss (DWS) for (Emono: Wimono) and (E*, w*). State the implication of this exercise. (g) How much labor does the monopsony firm hire and at what wage when it must pay when it must pay a minimum wage of $25? State the implication of this exercise.arrow_forward
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