a) If Wm = Wf from what type of labor market does the firm hire its workers? b) Assume the productivity of workers increases as a result of improvement in technology. What will happen to each of the following in the short run? i) The market demand for labor ii)The wage rate the firm will pay c) Suppose the firm only produces good X and that the price of good Y, a substitute good, decreases. What will happen to the optimal quantity of labor the firm will hire? Explain. d) If the labor market were a monopsony, would the monopsonist hire more, fewer, or the same number of workers as QM to maximize its profit?
a) If Wm = Wf from what type of labor market does the firm hire its workers? b) Assume the productivity of workers increases as a result of improvement in technology. What will happen to each of the following in the short run? i) The market demand for labor ii)The wage rate the firm will pay c) Suppose the firm only produces good X and that the price of good Y, a substitute good, decreases. What will happen to the optimal quantity of labor the firm will hire? Explain. d) If the labor market were a monopsony, would the monopsonist hire more, fewer, or the same number of workers as QM to maximize its profit?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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a) If Wm = Wf from what type of labor market does the firm hire its workers?
b) Assume the productivity of workers increases as a result of improvement in technology. What will happen to each of the following in the short run?
i) The market demand for labor
ii)The wage rate the firm will pay
c) Suppose the firm only produces good X and that the price of good Y, a substitute good, decreases. What will happen to the optimal quantity of labor the firm will hire? Explain.
d) If the labor market were a monopsony, would the monopsonist hire more, fewer, or the same number of workers as QM to maximize its profit?
Transcribed Image Text:Wage
M
Market
S
D
QM Quantity
of Labor
Wage
WF
Firm
-MFC
MRP
Quantity
of Labor
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