Assume a monopsony uses only one factor, labor, L, to produce a final good, Q, which it sells in a competitive market at the price, p = 1. The inverse supply curve for labor is w = 20 + 2L. If the monopsony's labor demand curve is w = 70 - L, how many units of labor does it hire and at what wage? What value does the monopsony place on the last worker hired? How does the monopsony equilibrium compare to the competitive equilibrium?

Assume a monopsony uses only one factor, labor, L, to produce a final good, Q, which it sells in a competitive market at the price, p = 1. The inverse supply curve for labor is w = 20 + 2L. If the monopsony's labor demand curve is w = 70 - L, how many units of labor does it hire and at what wage? What value does the monopsony place on the last worker hired? How does the monopsony equilibrium compare to the competitive equilibrium?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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