4. If a monopsonist employer can perfectly wage-discriminate in hiring its workforce there is no dead- weight loss associated with the monopsony. (a) Explain the above statement. (b) Why is wage discrimination generally illegal even though it improves our usual measure of wel- fare W (the sum of worker surplus and buyer or employer surplus) in the factor market? (c) If all employers in an economy were effectively monopsonists who could engage in perfect wage discrimination, what would the resulting allocation of society's output look like intuitively?

4. If a monopsonist employer can perfectly wage-discriminate in hiring its workforce there is no dead- weight loss associated with the monopsony. (a) Explain the above statement. (b) Why is wage discrimination generally illegal even though it improves our usual measure of wel- fare W (the sum of worker surplus and buyer or employer surplus) in the factor market? (c) If all employers in an economy were effectively monopsonists who could engage in perfect wage discrimination, what would the resulting allocation of society's output look like intuitively?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6. Monopsony basics Consider a newspaper in a small town that has monopsony power in hiring journalists. The following table shows the labor hours that will be supplied at each of the given hourly wages, as well as the total cost of labor at each quantity of labor. Suppose the newspaper's demand for labor as a function MVP of the marginal value product of labor (MVPL) is given by L= 5.5- 20 Compute the marginal expense (MEL) and marginal value product (MVPL) of adding an additional hour at each quantity and enter the values into the following table. Hourly Wage WAGE (Dollars per hour) 90 80 60 10 100 40 20 30 20 40 70 10 50 0 30 The following graph depicts the supply of labor in this market. Labor Supplied (Hours) Use the grey points (star symbol) to plot the marginal expense at the five quantities of labor given in the previous table. Then use the blue points (circle symbol) to plot the firm's demand for labor as a function of the MVPL- 0 1 1 2 2 3 3 4 5 Total Labor Cost (Dollars per…
1. How is the wage rate and level of employment determined if the labor market was controlled by a monopsonist. Discuss and explain in detail with the help of diagrams.
5. Consider a perfectly competitive labor market in which a binding minimum wage is imposed. For this market, let ED represent the elasticity of labor demand and ES represent the elasticity of labor supply. In which of the following situations will the minimum wage be most beneficial to workers? O ED 1/2 and ES = 1/2 OED-1 and ES = 2 OED-2 and ES = 1 O ED=-3 and ES=1/4 ED=-4 and ES=4
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2) How many employees will the following firm use? This is a perfectly competitive market with a going price of $3, and the firm can sell as many as they want at that price. The wage that has to be paid to the employees is $30 a day. # of workers Output MPL MRP 1 42 2 82 3 100 4 115 125 131 A* Still referring to question 2... What would happen if the workers unionized and negotiated higher pay, now $50 a day? How would this wage increase change your answer from above? Show what this increase in wage would look like graphically. B*Still referring to question two, does the use of each additional worker show the law of diminishing marginal returns? Explain. co
45. Consider the following two statements: (1) According to the Blinder-Oaxaca decomposition of the wage gap between two groups of workers, differences in rewards for characteristics are considered to be evidence of discrimination. (2) Correspondence studies will never underestimate the extent of discrimination. What can you say about these two statements? O a. Both statements are incorrect. O b. Statement (2) is correct, statement (1) is incorrect. O c. Statement (1) is correct, statement (2) is incorrect. O d. Both statements are correct. Time left 0:30:14 4 8. All of the following can be deemed as a tradeoff between equity and efficiency except O a. unemployment compensation programs. O b. students working individually on a project except collective group work. Oc. disability programs. Od. welfare programs.
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. L 4. 5. O O C 0 O O a. C. b. B. C.D. d. F. Wage rate (dollars per hour) O Icon Key Exhibit 11-8 A labor market 8 7 6 5 4 3 2 1 0 A 10 G C H D -MARGINAL FACTOR COST MFC LABOR SUPPLY LABOR DEMAND MRP 20 30 40 Quantity of labor (workers per hour) If the labor market shown in Exhibit 11-8 is a monopsony, the wage rate and number of workers employed will be determined at point: 50 Question 9 of 25