Problem 5. A firm with Monopsony in the Labour Market and Monopoly in the Output Market. (Short Run) You are the manager of a business that operates as a Monopolist in the output market, and it is a Monopsonist in the local labour market. The production function of the business is given by: Q- 21 In the production function, Q is output, L is the number of workers employed. The wage rate is $10. As a Monopolist, the firm faces a market demand given by: P- 100-Q As a Monopsonist, the firm faces supply of labour given by w 10L Problem 6. A factory that you are managing has an hourly production process that can be represented by the following Cobb Douglas Production function: Q = 10KL The price of one unit of capital per hour is S20 and the price of one unit of labour per hour is $20. You have been instructed to produce100 units per hour or Q-100. Find the optimal amount of labour and capital that you will be using, and compute the total cost.

Problem 5. A firm with Monopsony in the Labour Market and Monopoly in the Output Market. (Short Run) You are the manager of a business that operates as a Monopolist in the output market, and it is a Monopsonist in the local labour market. The production function of the business is given by: Q- 21 In the production function, Q is output, L is the number of workers employed. The wage rate is $10. As a Monopolist, the firm faces a market demand given by: P- 100-Q As a Monopsonist, the firm faces supply of labour given by w 10L Problem 6. A factory that you are managing has an hourly production process that can be represented by the following Cobb Douglas Production function: Q = 10KL The price of one unit of capital per hour is S20 and the price of one unit of labour per hour is $20. You have been instructed to produce100 units per hour or Q-100. Find the optimal amount of labour and capital that you will be using, and compute the total cost.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Perfect Competition

It is the structure of the market that is said to exist when with many buyers and sellers exchanging similar commodities and its price is fixed by the market forces, demand, and supply, and a single firm cannot cause an impact over the price or market value of the homogenous product. This structure of the market is called perfect competition.

Question

Problem 5.
A firm with Monopsony in the Labour Market and Monopoly in the Output Market. (Short Run)
You are the manager of a business that operates as a Monopolist in the output market, and it is a Monopsonist in the
local labour market. The production function of the business is given by: Q = 2L In the production function, Q is
output, L is the number of workers employed. The wage rate is $10.
As a Monopolist, the firm faces a market demand given by: P= 100 - Q
As a Monopsonist, the firm faces supply of labour given by w 10L
Problem 6.
A factory that you are managing has an hourly production process that can be represented by the following Cobb
Douglas Production function: Q = 10KL The price of one unit of capital per hour is s20 and the price of one unit of
labour per hour is $20. You have been instructed to produce100 units per hour or Q-100, Find the optimal amount
of labour and capital that you will be using, and compute the total cost.

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