The figure below compares labor market outcomes of perfect competition and monopsony. Based on the figure match the right with the left correctly: MCL Market SL W1 W2 DL L2 L1 LABOR (L) workers hired under monopsony [ Choose ] workers hired under perfect competition ( Choose ] wage rate under monopsony [ Choose ] wage rate under perfect competition [ Choose ) competitive markets operate where [ Choose ) monopsony operates where [ Choose ) > >> > > > WAGE (W)

The figure below compares labor market outcomes of perfect competition and monopsony. Based on the figure match the right with the left correctly: MCL Market SL W1 W2 DL L2 L1 LABOR (L) workers hired under monopsony [ Choose ] workers hired under perfect competition ( Choose ] wage rate under monopsony [ Choose ] wage rate under perfect competition [ Choose ) competitive markets operate where [ Choose ) monopsony operates where [ Choose ) > >> > > > WAGE (W)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The table below shows the quantity demanded and supplied at various wage rates for a competitive market. Wage Rate Quantity of Workers Demanded Quantity of Workers Supplied $100 5 50 90 10 45 80 20 40 70 35 35 60 50 30 If the workers form a union and negotiate a weekly wage of $90, how many workers will be supplied and demanded? Multiple Choice The quantity demand will be 10 and the quantity supplied will be 35. The quantity demanded will be 10 and the quantity supplied will be 45. The quantity demand and supplied will both be 35. The quantity demanded will be 35 and the quantity supplied will be 45.
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The table shows levels of employment (Labor), the marginal product of each of those levels, and a monopoly's marginal revenue. What is the monopoly's marginal revenue product at each level of employment? If the monopoly operates in a perfectly competitive labor market where the going market wage is $20, what is the firm's profit maximizing level of employment?
23. Question 23 is based on the below-mentioned diagram illustrates a monopsony outcome. The monopsony firm MRP = marginal revenue product, MFC = marginal factor cost and the wage is determined by the labour supply curve at this level of output. In the absence of a union the monopsony firm hires Lm workers and pays them Wm. MFC wage Wu Wm Lm S O a. hire less than Lm workers. Ob. hire a maximum of Lm workers. Ochire greater than Lm workers. Od. None of the above. MRP Quantity of labor Suppose the union and firm negotiates a wage above Wu, the firm will A
In a purely competitive labor market (a), market labor supply S and market labor demand D determine the equilibrium wage rate Wc and the equilibrium number of workers Qc . Each individual competitive firm (b) takes this competitive wage Wc as given. Thus, the individual firm’s labor supply curve s = MRC is perfectly elastic at the going wage Wc . Its labor demand curve, d, is its MRP curve (here labeled mrp). The firm maximizes its profit by hiring workers up to where MRP = MRC. Area 0abc represents both the firm’s total revenue and its total cost. The green area is its total wage cost; the blue area is its nonlabor costs, including a normal profit—that is, the firm’s payments to the suppliers of land, capital, and entrepreneurship. This firm’s labor demand curve d in graph (b) slopes downward because: a. the law of diminishing marginal utility applies. b. the law of diminishing returns applies. c. the firm must lower its price to sell additional units of its product. d. the firm is a…
(c) Let us now turn to the labor market for grocery store workers in Little town. Recently one of the last two grocery stores in Little town closed leaving only one employer for grocery store workers in this area. This labor market is not very competitive. What type of market structure is this? (d) Draw a typical supply curve (i.e. average expenditure), marginal expenditure, and demand for the grocery store in Little Town. Label the equilibrium wage and number of grocery store workers. (e) Suppose that some time has passed and the population has grown in Little Town and there are now many grocery stores. Now suppose that the grocery store workers unionize. Draw a graph to depict the equilibrium wage and number of workers in this new market.
Candice’s’ Cookies is a new cookie delivery company in Gainesville, Florida. The firm hires local college students to sell cookies door-to-door in higher income neighborhoods. Each of these “Sales Associates” sells cookies, which increases Candice’s Cookies’ total revenue, but must be paid an hourly wage. The graph below depicts Candice’s Cookies’ demand for labor curve when the retail price of a cookie is $2. Show Transcribed Text Part (i): Suppose that the retail price of a cookie is $2.50. What is the marginal product of the 4th Sales Associate? 1 cookie 2 cookies 3 cookies 4 cookies 5 cookies Part (ii): Suppose that the retail price of a cookie is $2.50. What is the marginal product of the 6th Sales Associate? 1 cookie 2 cookies 3 cookies 4 cookies 5 cookies Part (iii): Suppose that the retail price of a cookie is $2. What is the marginal product of the 8th Sales Associate? 1 cookie 2 cookies 3 cookies 4 cookies 5 cookies
Four (TYPE I) firms sell Product X in competitive markets at a price of 10. They each operate with the production function: x = 100L – L². Another firm with monopoly power (TYPE II) sells faces demand curve P = 160 – Y and has production function Y = 5L. All five firms hire as wage-takers in the same market where labour supply is w = 2L. Illustrate and quantify the equilibrium wage and the number of workers hired by each firm. а. Solve for the equilibrium wage and employment by each firm. b. Provide a 3-panel diagram. 6.
Fig. A 250 $ 200 Fig. C 150 100 50 0 250 200 150 0 12 100 50 0 I 0 VMP=MRP LS-MFC 10 20 MRP VMP LS=MFC 10 20 30 40 URE 30 50 40 50 L Fig. B Fig. D 250 200 150 100 50 0 250 200 150 100 50 0 $ 0 $ 45. Assuming the labor market is perfectly competitive, which of the following statements are TRUE? O(a) The VMP is the demand for labor curve for a firm that sells its product in a perfectly competitive market (b) The MRP is the demand for labor curve for a firm that has monopoly power when it sells its product. (c) Both (a) and (b) are correct O(d) None of the above 0 10 VMP=MRP MRP 10 20 VMP 20 30 40 30 40 LS 50 50 LS -MFC ||||| L MFC
Suppose the market supply is given by L=2.8w. Assume the product market is competitive and the product price is p=$12. Also suppose MPL=8.6-0.8L and that the firm has monopsony power. A.Graph the marginal revenue product of labour. The slope of this curve is equal to The vertical intercept of this curve is equal to .Write the formula for the inverse supply of labour and graph the supply curve. The slope of this supply curve is B. For this firm, the fully simplified formula for marginal cost is MC₁ = __ L (Enter the value which completes the formula. Do not enter the variable, it has been given) Illustrate this market graphically, including accurate numbers for slopes and intercepts. Write the condition which the monopsonist's optimal choice of labour must satisfy. This monopsonist will choose employment level . At this employment level, the firm will offer the wage $ , and the value marginal product of labour is $ The average cost of labour for this monopsonist is $ and the firm's…
3. A monopsonist's inverse demand for labor can be written as D-'(w) = VMP(E) = 40 – 0.005ED. Labor is supplied to the firm according to the inverse supply function S-(w) s(E) = w = 5+ 0.01E3. %3D
Refer to the following diagram that shows the labor demand for a monopolistic firm hiring labor from a competitive labor market. Wage W₂ W₁ 2. A 1. B MRP с Q₁ Q₂ The allocatively efficient level of employment for this firm is given by some amount greater than Q 2. some amount between Q 1 and Q 2. S VMP Labor