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A firm acting as a monopsonist (MS) in the labour market produces an output, which it sells in a market of full competition at a price of p>0, by means of the production function f:R+>R+ with e-f(e), f'>0 and f"<0, where the only input is labour e. The inverse labour supply function wS:R+->R+ with 8-ws(8) increases linearly in e. Let the labour wage be denoted by w. The following graph represents the situation described, using the notation introduced in the course.

A firm acting as a monopsonist (MS) in the labour market produces an output, which it sells in a market of full competition at a price of p>0, by means of the production function f:R+>R+ with e-f(e), f'>0 and f"<0, where the only input is labour e. The inverse labour supply function wS:R+->R+ with 8-ws(8) increases linearly in e. Let the labour wage be denoted by w. The following graph represents the situation described, using the notation introduced in the course.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A firm acting as a monopsonist (MS) in the labour market produces an output, which it sells in a market of full competition at a price of p>0, by means of the production function f:R+->R+ with e-f(e), f>0 and f"<0, where the only input is labour e. The inverse labour supply function wS:R+->R+ with &-ws(8) increases linearly in e. Let the labour wage be denoted by w. The following graph represents the situation described, using the notation introduced in the course. MCMS(1) w (1) a MRPL(1) Which of the following statements is correct?
Transcribed Image Text:A firm acting as a monopsonist (MS) in the labour market produces an output, which it sells in a market of full competition at a price of p>0, by means of the production function f:R+->R+ with e-f(e), f>0 and f"<0, where the only input is labour e. The inverse labour supply function wS:R+->R+ with &-ws(8) increases linearly in e. Let the labour wage be denoted by w. The following graph represents the situation described, using the notation introduced in the course. MCMS(1) w (1) a MRPL(1) Which of the following statements is correct?
Which of the following statements is correct? Choose one answer: a. The equilibrium wage in the monopsony is given by b. b. The labour input in the equilibrium of complete competition is given by c. c. The labour input in the monopsony equilibrium is given by d. d. The equilibrium wage in the monopsony is given by a.
Transcribed Image Text:Which of the following statements is correct? Choose one answer: a. The equilibrium wage in the monopsony is given by b. b. The labour input in the equilibrium of complete competition is given by c. c. The labour input in the monopsony equilibrium is given by d. d. The equilibrium wage in the monopsony is given by a.
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