Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 27, Problem 6QP
To determine
The reason for a monopsonist to pay a wage rate less than labor’s marginal revenue product (MRP).
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Students have asked these similar questions
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.
Which 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.
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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.
The more elastic the labour supply is, the smaller the wage paid by a monopsonist. True or False?
Chapter 27 Solutions
Economics (MindTap Course List)
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- Assume a monopsony uses only one factor, labor, L, to produce a final good, Q, which it sells in a competitive market at the price, p = 1. The inverse supply curve for labor is w = 20 + 2L. If the monopsony's labor demand curve is w = 70 - L, how many units of labor does it hire and at what wage? What value does the monopsony place on the last worker hired? How does the monopsony equilibrium %3D compare to the competitive equilibrium?arrow_forwardExplain the difference between competitive and monopsonistic labor markets. How does the monopsonistic firm optimize its choice of optimal labor? [Hint: explain with diagrams]arrow_forwardA monopsonist's demand for labor can be written as VMPE = 40 – 0.005ED. Labor is supplied to the firm according to w = 5 + 0.01ES. Thus, the firm's marginal cost of hiring workers when it hires off of this supply schedule is MCE = 5 + 0.02ES. A. How much labor does the monopsony firm hire and at what wage when there is no minimum wage? B. How much labor does the monopsony firm hire and at what wage when it must pay a minimum wage of $25?arrow_forward
- What would happen if the labour market is dominated by a monopsonist, and the government sets a minimum wage that is above the competitive wage? please answer with graphsarrow_forwardDescribe the hiring decision of a perfectly discriminating monopsonist and of a nondiscriminating monopsonist. In what sense do monopsonists “exploit” workers?arrow_forwardSolve for and fill in the missing portions of the following table to derive the monopsonist's derived demand curve for labor and answer the following questions: Total Physical Marginal Physical Product Number of Marginal Revenue Price Workers Product Product 246 9,557.10 32.70 32.70 247 32.65 1 248 9,622.35 32.60 32.60 249 9,654.90 1 32.55 250 32.50 1 32.50 251 9,719.85 32.45 1 252 9,752.25 32.40 1 32.40 253 9,784.60 1 32.35 32.30 1 32.30 254 9,816.90 Question: What is the total physical product when the firm hires the 247th worker, and what is the marginal revenue product from hiring the 247th worker?arrow_forward
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