Economics (Book Only)
12th Edition
ISBN: 9781285738321
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 28, Problem 4VQP
To determine
Describe whether the supply curve of a monopsonist lies below the MFC curve.
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The more elastic the labour supply is, the smaller the wage paid by a monopsonist.
True
False
Please only answer parts four five and six
You are given the following information about a monopsonist: The demand is
P= 25-0.25Q,
the average expenditure curve is
AE = 0.5Q,
and the marginal expenditure curve is
ME = 1Q.
The quantity (Q) is in thousands of units.
Given the information above, how much will the monopsonist purchase, and how
much will it pay? (Round your responses to two decimal places.)
The monopsonist will purchase thousand units at a price of $
per unit.
Chapter 28 Solutions
Economics (Book Only)
Ch. 28.2 - Prob. 1STCh. 28.2 - Prob. 2STCh. 28.2 - Prob. 3STCh. 28.3 - Prob. 1STCh. 28.3 - Prob. 2STCh. 28.3 - Prob. 3STCh. 28 - Prob. 1VQPCh. 28 - Prob. 2VQPCh. 28 - Prob. 3VQPCh. 28 - Prob. 4VQP
Ch. 28 - Prob. 5VQPCh. 28 - Prob. 1QPCh. 28 - Prob. 2QPCh. 28 - Prob. 3QPCh. 28 - Prob. 4QPCh. 28 - Prob. 5QPCh. 28 - Prob. 6QPCh. 28 - Prob. 7QPCh. 28 - Prob. 8QPCh. 28 - Prob. 9QPCh. 28 - Prob. 10QPCh. 28 - Prob. 11QPCh. 28 - Prob. 12QPCh. 28 - Prob. 13QPCh. 28 - Prob. 1WNGCh. 28 - Prob. 2WNGCh. 28 - Prob. 3WNG
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- Solve it correctly please. Iarrow_forwardThe demand for labor for a firm operating in a perfectly competitive output market equals ____. The demand for labor for a firm with market power in the output market equals ______. Would you expect the presence of labor unions to lead to higher or lower pay for worker-members? Would you expect a higher or lower quantity of workers hired by those employers? Explain briefly.arrow_forwardA monopsonist faces a market labor supply curve w=20+L where w is wage rate and L is the number of workers employed. If the firm's labor demand curve is w=200-4L, what is the optimal wage rate and quantity of labor employed?arrow_forward
- 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; lowerarrow_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_forwardA monopsonist's demand curve for labor is given by w= 15 – 2L, where w is the hourly wage rate and L is the number of person-hours hired. a. If the monopsonist's supply (AFC) curve is given by w= 1L, which gives rise to a marginal factor cost curve of MFC = 2L, how many units of labor will he employ and what wage will he pay? Instructions: Round your answer for labor to 1 decimal place. Round your answer for wage to the nearest penny (2 decimal places). Labor: Wage: $ b. How would your answers to part (a) be different if the monopsonist were confronted with a minimum wage bill requiring him to pay at least $7/hr? Instructions: Round your answer for labor to 1 decimal place. Round your answer for wage to the nearest whole number. Labor: Wage: $arrow_forward
- 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; lowerarrow_forwardSuppose that the Ebay warehouse behaves as a monopsonist in the local labor market. Assume that its labor supply curve is w(LS) = 4LS and its labor demand curve is w(LD ) = 42.8−2LD. To maximize its profits: a. how many units of labor will Ebay hire and b. what wage will Ebay pay? Now suppose that the local labor union goes on strike and Ebay is eventually forced to increase the pay of its workers to a competitive wage. What wage would Ebay then have to pay? c. Find competitive wage The correct answers are: a. 4.28 b. 17.12 c. 28.52arrow_forwardFirm Alpha is a monopsonist in the labor market. The firm’s marginal value of labor is MVL = 105 - 3L. The labor supply is LS = 0.5w. The monopsonist uses its market power to maximize its own profit. The monopsonist hires L= workers and pays a wage w=. The deadweight loss in this market is DWL=.arrow_forward
- 25. Consider the graph below. The profit-maximizing level of employment by the monopsonist in the labor market shown above will be: A. A B. B C. C D. D W MRC -SL * MRP 0 ABC D Quantity of Labor Larrow_forwardConsider a firm that sells output at P = 5 and has a short-run production function:Q(L) = 20L − L^2. Its wage rate function is w = 40 + 2L. - Suppose the firm is a monopsonist, how much labor will it hire to maximize profits?How much wage will it pay?- Solve for the rate of monopsonistic exploitation.- If instead, the firm is operating in a perfectly competitive market, how much laborwill it hire to maximize profits? How much wage will it pay?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
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