units of labor marginal revenue proudct 0 1 30 2 24 3 18 4 15 5...

units of labor	marginal revenue proudct
0
1	30
2	24
3	18
4	15
5	12
6	10

Assume a firm is a monopsonist that can hire its first worker for $6 but must increase the wage rate by $3 to attract each successive worker (so that the second worker must be paid $9, the third $12, and so on). The marginal revenue product of labor is given in the table .

a. Draw the firm’s labor supply and marginal resource cost curves.

Are the labor supply and MRC curves the same or different? If they are different, which one is higher?

b. What is the competitive equilibrium wage rate?

What is the equilibrium level of employment?

c. What is the wage rate under monopsonistic conditions?

What is the equilibrium level of employment under monopsonistic conditions?

By how much does the monoposonist reduce wages below the competitive wage?

By how much does the monopsonist reduce employment below the competitive level?

Solutions

Expert Solution

a. Draw the firm’s labor supply and marginal resource cost curves.

The graph is shown below. Labor supply is a function of wage rate. MRC is constructed from TRC where TRC = labor supply x wage rate.

Are the labor supply and MRC curves the same or different? If they are different, which one is higher?

They are different MRC is higher than Labor supply because slope of MRC is twice the slope of labor supply

b. What is the competitive equilibrium wage rate?

It is $15 per hour where labor demand is equal to labor supply

What is the equilibrium level of employment?

It is 4 workers

c. What is the wage rate under monopsonistic conditions?

It is $12 because MRC = labor supply results in 3 workers hired and for 3 workers, a total of $12 is demanded by the labor supply function.

What is the equilibrium level of employment under monopsonistic conditions?

It is 3 workers

By how much does the monoposonist reduce wages below the competitive wage?

It reduces the wage by $3 per hour

By how much does the monopsonist reduce employment below the competitive level?

It reduces employment by 1 worker

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Q 0 1 2 3 4 5 6 7 8 TC 10 18 24 30 38...

Q 0 1 2 3 4 5 6 7 8 TC 10 18 24 30 38 50 66 91 120 AC 18 12 10 9.5 10 11 13 15 MC 8 6 6 8 12 16 25 29 TR 16 32 48 64 80 96 112 128 MR 16 16 16 16 16 16 16 16 A perfectly competitive TV production firm in Lost Angeles faces the above short-run cost schedule. The price per unit of output is £16. a)...

DATA 3 8 2 15 2 2 0 0 4 5 2 7 0 1 5...

DATA 3 8 2 15 2 2 0 0 4 5 2 7 0 1 5 3 0 2 5 4 1 6 9 5 3 1 2 10 6 1 1 2 1 19 6 6 6 7 0 4 1 1 1 0 1 9 2 2 2 1 16 10 10 5 2 3 1 4 4 4 3 6 2 8 5 2 7 1 6 4 0 3 1 1 1 Background: A group of...

1.Table 27 Labor Output Marginal Product of Labor Marginal Revenue Product of Labor Wage 0 0...

1.Table 27 Labor Output Marginal Product of Labor Marginal Revenue Product of Labor Wage 0 0 --- --- --- 1 400 400 $800 $450 2 700 300 $600 $450 3 950 250 $500 $450 4 1050 100 $200 $450 Refer to Table 27. How many workers should the firm hire? A.1 B. 2 C. 3 D. 4 2. If education produces positive externalities and the government does not intervene in the market, we would expect Group of answer choices A....

Number of Employees Total Production Marginal Product of Labor Marginal Revenue Product 0 0 0 1...

Number of Employees Total Production Marginal Product of Labor Marginal Revenue Product 0 0 0 1 18 18 2 30 12 3 41 11 4 46 5 If the price of the item is $10.00 per unit and the employees cost $100 each, how many employees should the firm hire to maximize their profit? Two employees Three employees Four employees One employee

exampleInput.txt 1 2 3 0 2 3 4 0 1 3 5 0 1 2 6...

exampleInput.txt 1 2 3 0 2 3 4 0 1 3 5 0 1 2 6 1 5 6 8 2 4 6 7 3 4 5 9 10 5 8 9 4 7 9 6 7 8 6 How can I detect when 'cin' starts reading from a new line. The amount of numbers in each row is unknown. I need them in type 'int' to use the data.

Week 1 2 3 4 5 6 Value 18 14 17 12 18 15 Calculate the...

Week 1 2 3 4 5 6 Value 18 14 17 12 18 15 Calculate the measures of forecast error using the naive (most recent value) method and the average of historical data (to 2 decimals). Naive method Historical data Mean absolute error Mean squared error Mean absolute percentage error

Week 1 2 3 4 5 6 Value 18 14 15 10 17 15 Using the...

Week 1 2 3 4 5 6 Value 18 14 15 10 17 15 Using the naïve method (most recent value) as the forecast for the next week, compute the following measures of forecast accuracy. (a) Mean absolute error If required, round your answer to one decimal place. (b) Mean squared error If required, round your answer to one decimal place. (c) Mean absolute percentage error If required, round your intermediate calculations and final answer to two decimal places. (d)...

These are the cash flows. Year 0 1 2 3 4 5 6 Revenue 3.2000 4.0000...

These are the cash flows. Year 0 1 2 3 4 5 6 Revenue 3.2000 4.0000 5.6000 5.6000 4.0000 2.4000 Expenses .7200 .9000 1.2600 1.2600 .9000 .5400 Depreciation .9500 .9500 .9500 .9500 .9500 .9500 Pretax profit 1.5300 2.1500 3.3900 3.3900 2.1500 .9100 Tax .5355 .7525 1.1865 1.1865 .7525 .3185 Net income .9945 1.3975 2.2035 2.2035 1.3975 .5915 OCF 1.9445 2.3475 3.1535 3.1535 2.3475 1.5415 Cash flow investment −5.7000 .4362 Change in NWC −.3200 −.0800 −.1600 0.0000 .1600 .1600 .2400...

Quantity Marginal Cost ATC 0 — —— 1 $3 $8.00 2 2 5 3 3 4.33...

Quantity Marginal Cost ATC 0 — —— 1 $3 $8.00 2 2 5 3 3 4.33 4 4 4.25 5 5 4.40 6 6 4.67 7 8 5.15 8 9 5.62 9 10 6.11 10 12 6.70 Use the table above to answer the following questions. Assume the table above describes the costs for a typical firm in a perfect competition industry and the market equilibrium price is $9. A) How many units should this firm produce ? B) What...

x (Bins) frequency 0 0 1 0 2 0 3 2 4 5 5 8 6...

x (Bins) frequency 0 0 1 0 2 0 3 2 4 5 5 8 6 13 7 33 8 42 9 66 10 77 11 105 12 103 13 110 14 105 15 84 16 70 17 51 18 40 19 27 20 27 21 15 22 5 23 7 24 2 25 2 26 1 27 0 28 0 29 0 30 0 (7) On the Histogram worksheet, calculate all frequencies of the distribution using the table shown....

Subjects