ur market. The production function of the business is given by: Q=4L In the production function, Q is output, L is the number of workers employed, As a Monopolist, the firm faces a market demand given by: P = 100-Q As a Monopsonist the firm faces a supply of labour given by the expression: w = 8L a) Calculate the equilibrium number of units of labour employed in short run. b) Briefly discuss the advantages for a firm of being a Monopolist in the output Market and a Monopsonist in the Labour Market and try to find a real life example o

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

Labour Demand with Monopsony in the Labour Market and Monopoly in the Output Market in the 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=4L In the production function, Q is output, L is the number of workers employed, As a Monopolist, the firm faces a market demand given by: P = 100-Q

As a Monopsonist the firm faces a supply of labour given by the expression: w = 8L

a) Calculate the equilibrium number of units of labour employed in short run.

b) Briefly discuss the advantages for a firm of being a Monopolist in the output Market and a Monopsonist in the Labour Market and try to find a real life example of a firm that can modeled as a Monopolist/ Monopsonist.

c) What have you learn from doing or thinking about this problem?

Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Exhaustible Resources
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.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
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)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
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-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education