3) Consider a firm that produces output y in a a perfectly competitive market and can charge the market price p = 5 which it takes as given. Sup- pose the firm is the only employer in the region and produces output using labor, x so that production is given by y = x. The firm is then a monopsonist and offers the wage w(x) = (2 + 5x) for each unit of labor that it uses so that the total cost is to the firm is w(y)y= w(x)x and the marginal cost is given by MC = (2+ 10x). a) Write down the profit maximization problem of the firm. b) What is the marginal revenue of the firm. c) calculate the number of labor units used, x, the wage w(x), the output y and the profit TT.

3) Consider a firm that produces output y in a a perfectly competitive market and can charge the market price p = 5 which it takes as given. Sup- pose the firm is the only employer in the region and produces output using labor, x so that production is given by y = x. The firm is then a monopsonist and offers the wage w(x) = (2 + 5x) for each unit of labor that it uses so that the total cost is to the firm is w(y)y= w(x)x and the marginal cost is given by MC = (2+ 10x). a) Write down the profit maximization problem of the firm. b) What is the marginal revenue of the firm. c) calculate the number of labor units used, x, the wage w(x), the output y and the profit TT.

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 3PA

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Question is in the attached image. Thank you!

3) Consider a firm that produces output y in a a perfectly competitive
market and can charge the market price p = 5 which it takes as given. Sup-
pose the firm is the only employer in the region and produces output using
labor, x so that production is given by y = x. The firm is then a monopsonist
and offers the wage w(x) =
(2 + 5x) for each unit of labor that it uses so
that the total cost is to the firm is w(y)y = w(x)x and the marginal cost is
%3D
given by MC = (2 + 10x).
a) Write down the profit maximization problem of the firm.
b) What is the marginal revenue of the firm.
c) calculate the number of labor units used, x, the wage w(x), the output y
and the profit T.
d) At what wage will the there be an efficient use of labor?
e) How could the government go about moving from the monopsonist labor
outcome to a more efficient outcome?

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Table 14.13 shows information from the supply curve for labor for a monopsonist, that is, the wage rate required at each level of employment. What is the monopsonists marginal cost of labor at each level of employment? If each unit of labors marginal revenue product is 13, what is the firms profit maximizing level of employment and wage?
Please solve immidiately
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