EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 8220100605932
Author: Blinder
Publisher: Cengage Learning US
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Question
Chapter 19, Problem 1DQ
To determine
Trend of student labor in labor market.
Expert Solution & Answer
Explanation of Solution
There are large numbers of unskilled labors in college and in college towns. The marginal productivity of such labor is fairly low, thus their wage rate is also low. College is a major employer of student labor, hence it act as a monopolist and reduce the wage rate of labors below the marginal product value. If the students formed a labor union, they can maintain the minimum wage rate.
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Chapter 19 Solutions
EBK ECONOMICS: PRINCIPLES AND POLICY
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Similar questions
- What would you expect to happen to wages in a monopsonistic labor market?arrow_forwardExplain why monopsony gives rise to union development in labor markets.arrow_forwardsmall hospital in rural Alaska is a monopsony employer of nurses. The nurses unionize. They have little power at the bargaining table, but they do bargain for a slightly higher wage. What happens to the number of nurses employed? What happens to labor costs and marginal labor costs?arrow_forward
- The marginal cost of labor (MCL) is equal to what for a firm that operates in a competitive labor market? How does this compare with the MCL for a monopsony.arrow_forwardThe graph below represents the labor supply curve of a monopsonistic firm. If the firm above hired labor at the quantity Q1, what wage rate would it pay? A-W1. B-W2. C-W3. D-W4. E-W5arrow_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_forward
- How did the rise of labor unions change the working conditions of labor?arrow_forwardAssume a monopsony uses only one factor, labor, L, to produce a final good, Q, which it sells in a competitive market at the price, p = 1. The inverse supply curve for labor is w = 20 + 2L. If the monopsony's labor demand curve is w = 70 - L, how many units of labor does it hire and at what wage? What value does the monopsony place on the last worker hired? How does the monopsony equilibrium %3D compare to the competitive equilibrium?arrow_forward
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