Assume a monopsony uses only one factor, i.e. labor, L, to produce a final good, Q, which is soldin a competitive market at the price p = 1 to maximise profits. The production function of themonopsonist is given by Q (L) = 100L — L². The inverse supply curve for labor is w(L) =220 + 2 L.c. Describe algebraically and graphically what the welfare effects would be of theintroduction of a minimum wage set at the competitive level. Would it improve welfare ifthe minimum wage were set above the competitive wage? Support your answer with agraph and economic intuition.

Monopsony refers to the market structure where only a single buyer exists in the market. Monopsony…

Assume a monopsony uses only one factor, i.e. labor, L, to produce a final good, Q, which is sold in a competitive market at the price p = 1 to maximise profits. The production function of the monopsonist is given by Q(L) = 100L — L². The inverse supply curve for labor is w(L) = 20 + 2 L. c. Describe algebraically and graphically what the welfare effects would be of the introduction of a minimum wage set at the competitive level. Would it improve welfare if the minimum wage were set above the competitive wage? Support your answer with a graph and economic intuition.

Assume a monopsony uses only one factor, i.e. labor, L, to produce a final good, Q, which is sold in a competitive market at the price p = 1 to maximise profits. The production function of the monopsonist is given by Q(L) = 100L — L². The inverse supply curve for labor is w(L) = 20 + 2 L. c. Describe algebraically and graphically what the welfare effects would be of the introduction of a minimum wage set at the competitive level. Would it improve welfare if the minimum wage were set above the competitive wage? Support your answer with a graph and economic intuition.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.5P

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The inverse labour demand curve of a monopsonist employer is W= 37,500 – 80L, where Wis the annual salary and Lis the number of workers hired. The labor supply is given by W= 9,400 + 108L. (a) The marginal expenditure equation is ME= Do not include a comma in your answer. Please use capital letters (e.g. L not I) (b) To the nearest integer, the monopsonist would hire 数字 workers and, given that number of workers, the salary they would pay is, rounded to 2 decimal places (e.g. 4.12) A7 Do not include a comma in your answer.
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Assume a monopsony uses only one factor, i.e. labor, L, to produce a final good, Q, which is sold in a competitive market at the price p = 1 to maximise profits. The production function of the monopsonist is given by Q (L) = 100L - 1L². The inverse supply curve for labor is w(L) = 2 20 + 2 L. a. Derive and describe the monopsony's inverse demand curve for labor. b. Describe algebraically and graphically how many units of labor the monopsony hires and at what wage. Describe the nature of monopsony power and provide economic intuition.
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Assume that the labor supply curve is S(w)=2w-20 and the demand curve is D(w)=40-w. In case of a non-discriminating monopsony, the marginal cost is MCN(W)=w-10. Note that MCN is the marginal cost in terms of workers. What is the change in the number of workers in the non-discriminating monopsony compared to perfect discriminating monopsony? Multiple Choice O O 5 decrease in workers 10 decrease in workers 5 increase in workers 10 increase in workers
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4 A production function is states as: 120Q1/3, with an output price of 25. Firms total revenue is stated as 11000Q1/2 with a labor supply of Q=15w. If you derive the monopsony equilibrium labor and monopsony wage what would they be.