3. A monopsonist's inverse demand for labor can be written as D-(w) = VMP(E) = 40 – 0.005ED. Labor is supplied to the firm according to the inverse supply function S-(w) = s(E) = w = 5+0.01E,. %3D (a) Assume that it is a short-run problem and state the monopsonist's PMAX problem mathematically. (b) Define the monopsonist's cost and find the marginal cost. (c) How much labor does the monopsony firm hire? At what wage rate does it hire workers?
3. A monopsonist's inverse demand for labor can be written as D-(w) = VMP(E) = 40 – 0.005ED. Labor is supplied to the firm according to the inverse supply function S-(w) = s(E) = w = 5+0.01E,. %3D (a) Assume that it is a short-run problem and state the monopsonist's PMAX problem mathematically. (b) Define the monopsonist's cost and find the marginal cost. (c) How much labor does the monopsony firm hire? At what wage rate does it hire workers?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![3. A monopsonist's inverse demand for labor can be written as D-1(w) = VMP(E)
0.005ED. Labor is supplied to the firm according to the inverse supply function S-(w)
s(E) = w = 5+0.01E,.
= 40 –
(a) Assume that it is a short-run problem and state the monopsonist's PMAX problem
mathematically.
(b) Define the monopsonist's cost and find the marginal cost.
(c) How much labor does the monopsony firm hire? At what wage rate does it hire workers?
(d) How much labor would the monopsonist approximately hire if it hired as if a perfectly
competitive firm does? At what wage rate would it hire workers approximately?
(e) Draw a graph.
(f) Approximately calculate producer surplus (PS), worker surplus (WS), and dead weight
loss (DWS) for (Emono: Wimono) and (E*, w*). State the implication of this exercise.
(g) How much labor does the monopsony firm hire and at what wage when it must pay when
it must pay a minimum wage of $25? State the implication of this exercise.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3ae55aea-4960-4906-8e16-4639682c0d75%2F31c5eb9a-4704-4b91-a2aa-1c2f7a74b5ed%2Ffc8balh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:3. A monopsonist's inverse demand for labor can be written as D-1(w) = VMP(E)
0.005ED. Labor is supplied to the firm according to the inverse supply function S-(w)
s(E) = w = 5+0.01E,.
= 40 –
(a) Assume that it is a short-run problem and state the monopsonist's PMAX problem
mathematically.
(b) Define the monopsonist's cost and find the marginal cost.
(c) How much labor does the monopsony firm hire? At what wage rate does it hire workers?
(d) How much labor would the monopsonist approximately hire if it hired as if a perfectly
competitive firm does? At what wage rate would it hire workers approximately?
(e) Draw a graph.
(f) Approximately calculate producer surplus (PS), worker surplus (WS), and dead weight
loss (DWS) for (Emono: Wimono) and (E*, w*). State the implication of this exercise.
(g) How much labor does the monopsony firm hire and at what wage when it must pay when
it must pay a minimum wage of $25? State the implication of this exercise.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education