Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 27, Problem 9QP
To determine
Explain the effect of labor unions on nonunion wage rates.
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small 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?
Solve question 5 please
Derive the firm’s demand schedule for labour if it were a monopolist that could influence the price at which it sells its output. That is, relax the assumption that product prices are fixed, and trace the implications.
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- 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 Laborarrow_forwardConsider a third pricing scheme that the union in Solved Problem 12.2 might use. It sets a wage, , and lets the firms hire as many workers as they want (that is, the union does not set a minimum number of hours), but requires a lump-sum contribution to each worker’s retirement fund. What is such a pricing scheme called? Can the union achieve the same outcome as it would if it perfectly price discriminated? (Hint: It could set the wage where the supply curve hits the demand curve.) Does your answer depend on whether the union workers are identical? Solved Problem 12.2 Competitive firms are the customers of a union, which is the monopoly supplier of labor services. Show the union’s “producer surplus” if it perfectly price discriminates. Then suppose that the union makes the firms a take-it-or-leave-it offer: They must guarantee to hire a minimum of hours of work at a wage of , or they can hire no one. Show that by setting appropriately, the union can…arrow_forwardAssume that the labor supply curve is S(w)=2w-20 and the demand curve is D(w)=40-w. In case of a non-discriminating monopsony, the marginal cost is MCN(W)=w-10. Note that MCN is the marginal cost in terms of workers. What is the change in the number of workers in the non-discriminating monopsony compared to perfect discriminating monopsony? Multiple Choice O O 5 decrease in workers 10 decrease in workers 5 increase in workers 10 increase in workersarrow_forward
- 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_forwardAssume 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_forwardUnder monopsony, wages are determined by: Demand curve Marginal Labour Cost curve Intersection of MLC and Demand curve Interesection of MLC and Supply curve Supply Curve onlyarrow_forward
- 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. 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_forwardDefine the monospony market in economics. No plagiarism . Thankyouarrow_forwardPlease only answer parts four five and sixarrow_forward
- Under monopsony, wages that are paid are higher than reservation wage. True Falsearrow_forwardSuppose a specific labour market is considered to be a monopsony. Who holds the market power and can affect wages? The buyer and seller of labour have equal power in the market as they can both affect wages. Neither the buyer nor the seller of labour has market power because the wage rate is determined by the market forces of demand and supply. The buyer of labour generally has market power and can affect wages. The seller of labour generally has market power and can affect wages. 00Oarrow_forwardIf an employer have enough market power to dictate the wage, this is an example of Question 5 options: a monopoly. a labor union. a monopsony. the marginal cost of labor.arrow_forward
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