Consider a newspaper in a small town that has monopsony power in hiring journalists. The following table shows the labor hours that will be supplied at each of the given hourly wages, as well as the total cost of labor at each quantity of labor. Suppose the newspaper's demand for labor as a function MVP of the marginal value product of labor (MVPL) is given by L= 5.5- 20 Compute the marginal expense (MEL) and marginal value product (MVPL) of adding an additional hour at each quantity and enter the values into the following table. Hourly Wage WAGE (Dollars per hour) 10 20 60 30 100 50 40 90 40 50 80 70 20 10 The following graph depicts the supply of labor in this market. Use the grey points (star symbol) to plot the marginal expense at the five quantities of labor given in the previous table. Then use the blue points (circle symbol) to plot the firm's demand for labor as a function of the MVPL- 30 Labor Supplied (Hours) 1 0 + 0 1 2 3 2 4 3 5 Total Labor Cost (Dollars per hour) 10 4 5 8 LABOR (Hours) 40 90 160 250 To maximize profits, the firm will hire product of the final unit of labor hired. 7 Labor Supply MEL MVPL (Dollars per hour) (Dollars per hour) 8 9 10 ** ME Labor Demand Which of the following explains why the MEL, curve lies above the labor supply curve? O The firm faces a downward-sloping demand curve in the market for newspapers. O Each additional unit of labor has a lower marginal product than the previous one. ? O Each worker must be paid benefits in addition to the wage rate. O The marginal cost of hiring an additional unit of labor includes not only that unit of labor's wage but also an increase in the wages of all the other units of labor. and pay a wage of S per hour, which is the marginal value
Consider a newspaper in a small town that has monopsony power in hiring journalists. The following table shows the labor hours that will be supplied at each of the given hourly wages, as well as the total cost of labor at each quantity of labor. Suppose the newspaper's demand for labor as a function MVP of the marginal value product of labor (MVPL) is given by L= 5.5- 20 Compute the marginal expense (MEL) and marginal value product (MVPL) of adding an additional hour at each quantity and enter the values into the following table. Hourly Wage WAGE (Dollars per hour) 10 20 60 30 100 50 40 90 40 50 80 70 20 10 The following graph depicts the supply of labor in this market. Use the grey points (star symbol) to plot the marginal expense at the five quantities of labor given in the previous table. Then use the blue points (circle symbol) to plot the firm's demand for labor as a function of the MVPL- 30 Labor Supplied (Hours) 1 0 + 0 1 2 3 2 4 3 5 Total Labor Cost (Dollars per hour) 10 4 5 8 LABOR (Hours) 40 90 160 250 To maximize profits, the firm will hire product of the final unit of labor hired. 7 Labor Supply MEL MVPL (Dollars per hour) (Dollars per hour) 8 9 10 ** ME Labor Demand Which of the following explains why the MEL, curve lies above the labor supply curve? O The firm faces a downward-sloping demand curve in the market for newspapers. O Each additional unit of labor has a lower marginal product than the previous one. ? O Each worker must be paid benefits in addition to the wage rate. O The marginal cost of hiring an additional unit of labor includes not only that unit of labor's wage but also an increase in the wages of all the other units of labor. and pay a wage of S per hour, which is the marginal value
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![6. Monopsony basics
Consider a newspaper in a small town that has monopsony power in hiring journalists. The following table shows the labor hours that will be supplied
at each of the given hourly wages, as well as the total cost of labor at each quantity of labor. Suppose the newspaper's demand for labor as a function
MVP
of the marginal value product of labor (MVPL) is given by L= 5.5-
20
Compute the marginal expense (MEL) and marginal value product (MVPL) of adding an additional hour at each quantity and enter the values into
the following table.
Hourly Wage
WAGE (Dollars per hour)
90
80
60
10
100
40
20
30
20
40
70
10
50
0
30
The following graph depicts the supply of labor in this market.
Labor Supplied
(Hours)
Use the grey points (star symbol) to plot the marginal expense at the five quantities of labor given in the previous table. Then use the blue points
(circle symbol) to plot the firm's demand for labor as a function of the MVPL-
0
1
1
2
2
3
3
4
5
Total Labor Cost
(Dollars per hour)
10
5
4
LABOR (Hours)
40
90
160
To maximize profits, the firm will hire
product of the final unit of labor hired.
250
Labor Supply
MEL
(Dollars per hour)
7 8 9
10
MEL
•]
MVPL
(Dollars per hour)
Labor Demand
Which of the following explains why the MEL, curve lies above the labor supply curve?
O The firm faces a downward-sloping demand curve in the market for newspapers.
O Each additional unit of labor has a lower marginal product than the previous one.
O Each worker must be paid benefits in addition to the wage rate.
The marginal cost of hiring an additional unit of labor includes not only that unit of labor's wage but also an increase in the wages of all
the other units of labor.
and pay a wage of S
(?)
per hour, which is
the marginal value](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2b2774ef-0163-4a47-a649-5765c1b29ef1%2Fc8b9b26f-0401-49b2-8c09-491f43e816c5%2Fd65n346q_processed.jpeg&w=3840&q=75)
Transcribed Image Text:6. Monopsony basics
Consider a newspaper in a small town that has monopsony power in hiring journalists. The following table shows the labor hours that will be supplied
at each of the given hourly wages, as well as the total cost of labor at each quantity of labor. Suppose the newspaper's demand for labor as a function
MVP
of the marginal value product of labor (MVPL) is given by L= 5.5-
20
Compute the marginal expense (MEL) and marginal value product (MVPL) of adding an additional hour at each quantity and enter the values into
the following table.
Hourly Wage
WAGE (Dollars per hour)
90
80
60
10
100
40
20
30
20
40
70
10
50
0
30
The following graph depicts the supply of labor in this market.
Labor Supplied
(Hours)
Use the grey points (star symbol) to plot the marginal expense at the five quantities of labor given in the previous table. Then use the blue points
(circle symbol) to plot the firm's demand for labor as a function of the MVPL-
0
1
1
2
2
3
3
4
5
Total Labor Cost
(Dollars per hour)
10
5
4
LABOR (Hours)
40
90
160
To maximize profits, the firm will hire
product of the final unit of labor hired.
250
Labor Supply
MEL
(Dollars per hour)
7 8 9
10
MEL
•]
MVPL
(Dollars per hour)
Labor Demand
Which of the following explains why the MEL, curve lies above the labor supply curve?
O The firm faces a downward-sloping demand curve in the market for newspapers.
O Each additional unit of labor has a lower marginal product than the previous one.
O Each worker must be paid benefits in addition to the wage rate.
The marginal cost of hiring an additional unit of labor includes not only that unit of labor's wage but also an increase in the wages of all
the other units of labor.
and pay a wage of S
(?)
per hour, which is
the marginal value
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education