9.1 The textbook discussion of monopsonistic behavior begins with stat- ing the system of inverse input supply functions, p, =g+ Gs, where G is a symmetric positive semidefinite matrix. Assuming that a pure monopsonist is a price taker on the market for final commodities, with commodity prices p = c, and that he operates a single plant using a linear technology A, (a) Set up and justify the corresponding primal problem. (b) Derive the dual problem and explain its meaning as a whole and of each component. (c) In particular, show the entrepreneur's profit and give an appropriate economic explanation of the dual objective function.

9.1 The textbook discussion of monopsonistic behavior begins with stat- ing the system of inverse input supply functions, p, =g+ Gs, where G is a symmetric positive semidefinite matrix. Assuming that a pure monopsonist is a price taker on the market for final commodities, with commodity prices p = c, and that he operates a single plant using a linear technology A, (a) Set up and justify the corresponding primal problem. (b) Derive the dual problem and explain its meaning as a whole and of each component. (c) In particular, show the entrepreneur's profit and give an appropriate economic explanation of the dual objective function.

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 8SCQ: Table 14.13 shows information from the supply curve for labor for a monopsonist, that is, the wage...

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