Assume a firm is a monopsonist that can hire its first worker for $6 but must increase the wage rate by $3 to attract each successive worker. Draw the firm’s labor supply and marginal resource cost curves and explain their relationships to one another. On the same graph, plot the labor demand data of question 2. What are the equilibrium wage rate and level of employment? Why do these differ from your answer to question 9? On the following page, complete the labor demand table fora firm that is hiring labor competitively and selling its prod-uct in a purely competitive market. LOIa. How many workers will the firm hire if the market wagerate is $11.95? $19.95? Explain why the firm will not hirea larger or smaller number of units of labor at each ofthese wage rates.b. Show in schedule form and graphically the labor demandcurve of this firm.MarginalUnits ofTotalMarginalProductTotalRevenueLaborProductProductPriceRevenueProduct0$2$172312343453256026652| ||| 9. Complete the following labor supply table for a firm hiringlabor competitively: LO4Units ofWageTotal LaborMarginal Resource(Labor) CostLaborRateCost$14$$1414314414514614a. Show graphically the labor supply and marginal resource(labor) cost curves for this firm. Explain the relationshipof these curves to one another.b. Plot the labor demand data of question 2 on the graphused in part a above. What are the equilibrium wage rateand level of employment? Explain.

A monopsonist is a single firm in the market that demands labor. Being a single demander of labor,…

Answered: Assume a firm is a monopsonist that can…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume a firm is a monopsonist that can hire its first worker for $6 but must increase the wage rate by $3 to attract each successive worker. Draw the firm’s labor supply and marginal resource cost curves and explain their relationships to one another. On the same graph, plot the labor demand data of question 2. What are the equilibrium wage rate and level of employment? Why do these differ from your answer to question 9?

On the following page, complete the labor demand table for
a firm that is hiring labor competitively and selling its prod-
uct in a purely competitive market. LOI
a. How many workers will the firm hire if the market wage
rate is $11.95? $19.95? Explain why the firm will not hire
a larger or smaller number of units of labor at each of
these wage rates.
b. Show in schedule form and graphically the labor demand
curve of this firm.
Marginal
Units of
Total
Marginal
Product
Total
Revenue
Labor
Product
Product
Price
Revenue
Product
0
$2
$
17
2
31
2
3
43
4
53
2
5
60
2
6
65
2
| |||

9. Complete the following labor supply table for a firm hiring
labor competitively: LO4
Units of
Wage
Total Labor
Marginal Resource
(Labor) Cost
Labor
Rate
Cost
$14
$
$
14
14
3
14
4
14
5
14
6
14
a. Show graphically the labor supply and marginal resource
(labor) cost curves for this firm. Explain the relationship
of these curves to one another.
b. Plot the labor demand data of question 2 on the graph
used in part a above. What are the equilibrium wage rate
and level of employment? Explain.

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