LABOR ECONOMICS LOOSE PRINT UPGRADE
20th Edition
ISBN: 9781264115211
Author: BORJAS
Publisher: MCG
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Question
Chapter 4, Problem 11RQ
To determine
The impact of imposing of a minimum wage on the level of employment and wages.
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Check out a sample textbook solutionStudents have asked these similar questions
Consider the graph at right for a monopsonistic labor market.
The competitive wage is $750.00 per hour, and the competitive labor use is 62.50 workers.
In a monopsonistic labor market, the amount of labor used will be 41.7 workers and the wage will
be $ per hour (round your answer to the nearest penny).
(Round all of the following answers to the nearest dollar.)
In a monopsonistic labor market, consumer surplus will be $ ; the monopsonistic labor market
producer surplus will be area $, and the monopsonistic labor market producer deadweight loss
will be $
w, wage per hour
1400.00-
1200.00-
1000.00-
800.00-
600.00-
400.00-
200.00-
Monopsonistic Labor Market
833.33
0.00+
0.0
41.7
40.0
L, Workers per hour
80.0
ME
S
D
Q
What would you expect to happen to wages in a monopsonistic labor market?
True, False, and Explain.
If labor is hired in a monopsonistic market, a minimum wage will always guarantee employment will increase.
Chapter 4 Solutions
LABOR ECONOMICS LOOSE PRINT UPGRADE
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Similar questions
- Minimum wage is an example of what kind of economicarrow_forwardWhat 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_forwardUnder monopsony, wages that are paid are higher than reservation wage. True Falsearrow_forward
- Under monopsony, the interaction of supply and demand determines wages and number of workers employed. True Falsearrow_forwardTrue or false. When a labor market consists of a single monopsony buyer of labor interacting with a single monopoly seller of labor (such as a trade union), the resulting quantity of labor that is hired will always be inefficiently low.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
- You are less likely to find a monopsonistic labor market in a large city such as Philadelphia, Pennsylvania then in a small town such as Dry Creek, Wyoming. true or falsearrow_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_forwardThe 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_forward
- Workers are worse off when they face a monopsonistic labor market.arrow_forwardcompared with a competitive market, a monopsonist will pay a wage and hire workers. a) lower; fewer b) lower; more c) higher; fewer d) higher; more ———arrow_forwardDiscuss the effects of minimum wage legislation on employment .arrow_forward
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