Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
Textbook Question
Chapter 14, Problem 8SCQ

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.

1. What is the monopsonist’s marginal cost of labor at each level of employment?
2. If each unit of labor’s marginal revenue product is \$ 13 , what is the firm’s profit maximizing level of employment and wage?

Students have asked these similar questions
3. 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.
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?
Which 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.
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