7. Monopsony and elasticity of labor supplyConsider the labor market for hairstylists in two small towns, each with only one hair salon, such that the owners of the salons have monopsony hiringpower for hairstylists. The following graphs depict the labor supply, marginal expense of labor (MEL), and labor demand in these markets.WAGE (Dollars per hour)302724211815126300Labor Supply☆Labor Demand+ +24Town 1+6++8 10 12LABOR (Hours)+14MEL+16+1820WAGE (Dollars per hour)30272421181512300+2+4+6Town 2MELLabor SupplyLabor Demand+8 10 12 14 16 18 20LABOR (Hours)? Complete the following table with the profit-maximizing quantity of labor each salon will hire, along with the wage it will pay for each hour of labor.LaborWageTown 1Town 2In Town 1, the salon pays a wage that iswage isthe marginal value product of the final unit of labor hired, whereas in Town 2, thethe marginal value product of the final unit of labor hired.The outcome inwith respect to changes in the wage.is farther from that of a competitive market, given that the supply of labor iselastic (at the market equilibrium)

Labor supply refers to the total quantity of labor that individuals are willing and able to provide…

7. Monopsony and elasticity of labor supply Consider the labor market for hairstylists in two small towns, each with only one hair salon, such that the owners of the salons have monopsony hiring power for hairstylists. The following graphs depict the labor supply, marginal expense of labor (MEL), and labor demand in these markets. WAGE (Dollars per hour) 30 27 24 21 18 15 12 3 0 024 Town 1 MEL Labor Supply Labor Demand 6 8 10 12 14 16 18 20 LABOR (Hours) ? WAGE (Dollars per hour) 30 27 24 21 18 15 12 3 0 024 Town 2 MEL Labor Supply Labor Demand 6 8 10 12 14 16 18 20 LABOR (Hours) (?)

7. Monopsony and elasticity of labor supply Consider the labor market for hairstylists in two small towns, each with only one hair salon, such that the owners of the salons have monopsony hiring power for hairstylists. The following graphs depict the labor supply, marginal expense of labor (MEL), and labor demand in these markets. WAGE (Dollars per hour) 30 27 24 21 18 15 12 3 0 024 Town 1 MEL Labor Supply Labor Demand 6 8 10 12 14 16 18 20 LABOR (Hours) ? WAGE (Dollars per hour) 30 27 24 21 18 15 12 3 0 024 Town 2 MEL Labor Supply Labor Demand 6 8 10 12 14 16 18 20 LABOR (Hours) (?)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter14: Labor Markets And Income

Section: Chapter Questions

Problem 1SCQ: Table 14.10 shows levels of employment (Labor), the marginal product at each of those levels, and...

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2 of 2 Book Print erences ic raw ill 430s workers S 10 20 30 40 5:07 / 5:07 The following table gives output for different numbers of workers for Shiny Sleeves, a producer of shirt varnish. Shiny Sleeve's wages are $10 per hour. For each level of workers, calculate Shiny Sleeve's total hourly wage cost. Instructions: Enter Marginal Product and Wage Cost in whole numbers and Marginal Cost rounded to two decimal places. For each jump between levels of workers and output, calculate Shiny Sleeve's Marginal Product and Marginal Cost. output/hour 50 100 140 170 Marginal Product LO 5 4 3 1x
Give four explanations for why firms might find ii profitable lo pay wages above the level that balances quantity of labor supplied and quantity oflabor demanded.