Assume a firm is a monopsonist that can hire its first worker for $6 but must...

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 below. Units of Labor Marginal Revenue Product 0 1 $34 2 $28 3 $24 4 $20 5 $14 6 $10. Are the labor supply and MRC curves the same or different? If they are different, which one is higher? 4. What will be the competitive equilibrium wage rate and the level of employment? 5. What will be the wage rate and the level of employment under monopsonistic conditions? 6. By how much does the monoposonist reduce wages below the competitive wage? 7. By how much does the monopsonist reduce employment below the competitive level? _____ workers.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

A monopsony hire one worker at a wage of $6, two workers at a wage of...

A monopsony hire one worker at a wage of $6, two workers at a wage of $7 each, (by adding one worker each will cause a one dollar increase to the wage). If the marginal revenue product for all workers is $17, asking how much will the wage to pay?

A firm can hire 20 workers for $10 per hour, but finds it must raise the...

A firm can hire 20 workers for $10 per hour, but finds it must raise the wage to $12 to attract another worker. If it must pay all its workers the same wage, the marginal wage cost of the 21st worker is _. A.$10. B. $11. C. $21. D. $31.

1. A consulting firm must decide now whether to hire a young engineer. The main purpose...

1. A consulting firm must decide now whether to hire a young engineer. The main purpose of this engineer would be to work on a contract that the firm hopes to win. This new contract will begin in 2 months and last for 4 months. If the firm hires the engineer and wins the contract, the firm will make a profit of $6000 on the new contract (this figure allows for the cost of the new engineer during the 4...

Assume that a firm has a plant of fixed size and that it can vary its...

Assume that a firm has a plant of fixed size and that it can vary its output only by varying the amount of labor it employs. The table below shows the relationships between the amount of labor employed, the output of the firm, the marginal product of labor, and the average product of labor. (a) Assume each unit of labor costs the firm $20. Compute the total cost of labor for each quantity of labor the firm might employ,...

A firm can either use their own employees to keep the office clean, or hire a...

A firm can either use their own employees to keep the office clean, or hire a cleaning service to do it. Assume that as businesses reopen during a global pandemic, health and safety regulations require more frequent cleanings for reopened business, while at the same time there is a decrease in the wages firm must pay for low and semi-skilled workers. What is the predicted effect of this on the price and quantity in the market for cleaning services?

Assume that workers in Bulgaria and the U.K. can produce the following (in tons per worker...

Assume that workers in Bulgaria and the U.K. can produce the following (in tons per worker per year): U.S. production/ consumption before trade U.S. Production after specialization US consumption after specialization US Gains from trade Mexico production/ consumption before trade Mexico production after specialization Mexico consumption after specialization Mexico Gains from trade Crops Bulgaria 4 U.K. 10 Machines OR 8 OR 10 a) Which country’s producers have an absolute advantage in producing (a)crops, and (b) machines? Explain. b) Which country’s...

Assume a firm has 2 inputs in its production function, labor and capital, and can adjust...

Assume a firm has 2 inputs in its production function, labor and capital, and can adjust the amount of either one of these inputs in order to increase output. Assume the marginal product of a unit of capital is always twice as high as the marginal product of a unit of labor (this is true regardless of how much labor and how much capital the firm employs). If the firm wanted to expand output, would they ever do so by...

Assume that an American worker can produce 5 cars per year of 10 tons of grain...

Assume that an American worker can produce 5 cars per year of 10 tons of grain per year, whereas a Japanese worker can produce 15 cars per year or 5 tons of grain per year. Assume labor is the only input used in car and grain production. a) Which country has the absolute advantage in producing cars? In producing grain? Briefly explain. b) For the United States, what is the opportunity cost of producing a car? What is the opportunity...

Refer to the situation described in BE 6–33. Assume that, during the first year the company billed its customer $7 million

Refer to the situation described in BE 6–33. Assume that, during the first year the company billed its customer $7 million, of which $5 million was collected before year-end. What would appear in the year-end balance sheet related to this contract? Data From BE 6-33 A construction company entered into a fixed-price contract to build an office building for $20 million. Construction costs incurred during the first year were $6 million and estimated costs to complete at the end of the year were...

Assume that social security taxes are payable at a 6% rate on the first $100,000 of...

Assume that social security taxes are payable at a 6% rate on the first $100,000 of earnings and Medicare taxes are payable at a 1.5% rate with no maximum earnings, and that federal and state unemployment compensation taxes total 4.6% on the first $7,000 of earnings. If an employee, Dan, earns $2,500 for the current week and Dan's year-to-date earnings before this week were $6,800, what is the total payroll taxes related to the current week? Please show work to...

Subjects