Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter 11, Problem 19SQ
To determine
The MFC curve of the monopolist.
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The more elastic the labour supply is, the smaller the wage paid by a monopsonist.
True
False
If the sole employer in a market is a monopsonist, the equilibrium number of workers hired will be ___ and the equilibrium wage will be ___ than they would be in a perfectly competitive market.
a.Higher; higher
b.Lower; higher
c.Higher; lower
d.Lower; lower
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
Chapter 11 Solutions
Micro Economics For Today
Ch. 11.3 - Prob. 1YTECh. 11 - Prob. 1SQPCh. 11 - Prob. 2SQPCh. 11 - Prob. 3SQPCh. 11 - Prob. 4SQPCh. 11 - Prob. 5SQPCh. 11 - Prob. 6SQPCh. 11 - Prob. 7SQPCh. 11 - Prob. 8SQPCh. 11 - Prob. 9SQP
Ch. 11 - Prob. 10SQPCh. 11 - Prob. 11SQPCh. 11 - Prob. 1SQCh. 11 - Prob. 2SQCh. 11 - Prob. 3SQCh. 11 - Prob. 4SQCh. 11 - Prob. 5SQCh. 11 - Prob. 6SQCh. 11 - Prob. 7SQCh. 11 - Prob. 8SQCh. 11 - Prob. 9SQCh. 11 - Prob. 10SQCh. 11 - Prob. 11SQCh. 11 - Prob. 12SQCh. 11 - Prob. 13SQCh. 11 - Prob. 14SQCh. 11 - Prob. 15SQCh. 11 - Prob. 16SQCh. 11 - Prob. 17SQCh. 11 - Prob. 18SQCh. 11 - Prob. 19SQCh. 11 - Prob. 20SQ
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- 3. A monopsonist's inverse demand for labor can be written as D-1(w) = VMP(E) 0.005ED. Labor is supplied to the firm according to the inverse supply function S-(w) s(E) = w = 5+0.01E,. = 40 – (a) Assume that it is a short-run problem and state the monopsonist's PMAX problem mathematically. (b) Define the monopsonist's cost and find the marginal cost. (c) How much labor does the monopsony firm hire? At what wage rate does it hire workers? (d) How much labor would the monopsonist approximately hire if it hired as if a perfectly competitive firm does? At what wage rate would it hire workers approximately? (e) Draw a graph. (f) Approximately calculate producer surplus (PS), worker surplus (WS), and dead weight loss (DWS) for (Emono: Wimono) and (E*, w*). State the implication of this exercise. (g) How much labor does the monopsony firm hire and at what wage when it must pay when it must pay a minimum wage of $25? State the implication of this exercise.arrow_forwardConsider a monopsonist that hires 4.28 units of labor at a wage of 19.26. If the marginal value placed on the last worker hired is 41.22 a.) what is the elasticity of labor supply for this monopsonist?arrow_forwardsmall hospital in rural Alaska is a monopsony employer of nurses. The nurses unionize. They have little power at the bargaining table, but they do bargain for a slightly higher wage. What happens to the number of nurses employed? What happens to labor costs and marginal labor costs?arrow_forward
- The graph below represents the labor supply curve of a monopsonistic firm. If the firm above hired labor at the quantity Q1, what wage rate would it pay? A-W1. B-W2. C-W3. D-W4. E-W5arrow_forwardWhich of the following is characteristic of a labor market that is a monopsony? Multiple Choice О The supply curve for labor lies above the marginal resource cost curve of the firm. О The type of labor available is relatively mobile from one industry to another. The firm's employment is a small portion of the total employment of that type of labor. The wage rate the firm must pay varies directly with the number of workers it employs.arrow_forwardQuestion 14 For a monopsonist, the marginal factor cost is always: equal to the wage rate. less than the wage rate. greater than the wage rate the same as the labor supply. the same as the labor demand. Question 17 A monopsonist will hire more workers than will be hired in a competitive labor market. True False Question 19 Which of the following statements is true about monopsony? c and e. c, d, and e. Monopsonists exercise complete buying power. Monopsonists maximize profit by setting MRP = MFC. Monopsonists face the whole labor supply curve Question 20 A decrease in the price of the output will decrease the firm's demand for labor. True Falsearrow_forward
- 1. Why is a firm's demand for labor considered a 'derived demand?' What is it derived from? 2. The marginal cost of labor (MCL) is equal to what for a firm that operates in a competitive labor market? How does this compare with the MCL for a monopsony.arrow_forwardJacob owns company that offers jeans in a perfectly competitive product market. Jacob is a monopsonist in the labor market, and the table below shows the wages necessary for workers to supply their labor to Jacob's firm. Total Wage Bill Marginal Wage Employment Wage (TWB) Cost (MWC) 1 20 30 3 40 4 50 60 Question A Calculate the firm's total wage bill and marginal wage cost in each empty cell for the table above. Question B Referring to the table above, by how much does profit change with the hiring of the fourth worker if the marginal revenue product of the fourth worker is $90? 24 Question C Referring to the table above, if minimum wage was implemented by the government and set at a wage of $50, how would profit change for hiring the fourth work with a marginal revenue product of $90? $ Question D Assume now that the demand for labor is linear and is such that the firm would be willing to hire 1 worker for $80, 2 workers for $70, and so on. Using only the supply information in the…arrow_forwardThe Happyland Hospital is a monopsonist employer of nurses in the small city of Happyland. The market supply function of nurses is S(W) = 0.25W - 30, where Wis the nurses' weekly wage. a. What is the hospital's marginal expenditure, ME? ⒸME = 120. ⒸME = 8L - 120. ME=8L + 120. O ME = 8L. $ ME = 4L + 120. Instructions: Round quantities to the nearest whole number and all other answers to 2 decimal places as needed. b. If the hospital's marginal benefit is $4,000 per week no matter how many nurses it hires, what is the profit-maximizing number of nurses for the hospital to hire? c. What will the nurses' wage be? $ 16000 d. What is the deadweight loss? nurses. 0 xarrow_forward
- The graph above shows a labor market and a typical individual firm that is hiring labor from that market. (a) If WM = WF, from what type of labor market does the firm hire its workers? (b) Assume the productivity of workers increases as a result of improvement in technology. What will happen to each of the following in the short run? The market demand for labor (i) The wage rate the firm will pay Explain.arrow_forwardSuppose a firm purchases labor in a competitive labor market and sells its product in a competitive product market. The firm’s elasticity of demand for labor is -0.4. Suppose the wage increases by 5 percent. What will happen to the number of workers hired by the firm? What will happen to the marginal productivity of the last worker hired by the firm?arrow_forwardThe Geneva Watch Corporation manufactures watches on a conveyor belt with six stations. One worker stands at each station and performs the following tasks:Workers get paid $10 per hour. You can ignore any idle time of workers resulting from the beginning or the end of the day. a. What is the labor content? b. Assume a demand rate of 50 watches per hour. What is the takt time? c. Assume a demand rate of 50 watches per hour. What is the target manpower? d. An external supplier suggests shipping the battery module with preinstalled batteries, thereby eliminating the need for step 10. How would that impact process capacity? e. How could you increase the capacity of the process by rebalancing it?arrow_forward
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