Question

Suppose a firm is the sole employer in town, facing a labor supply curve w(L) =...

Suppose a firm is the sole employer in town, facing a labor supply curve w(L) = 2L. This monopsony is a price taker in the output market and has demand for labor DL= 200 –L (this is the marginal revenue product of labor). Calculate the total L demanded, producer surplus, consumer surplus, and DWL for this monopsony and compare these results to perfect competition.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

in Monopsony

MRPL = ME ( Marginal expenditure Curve )

w= 2L

So total expenditure TE = wL

= 2L2

ME = dTE/dL = 4L

So, at eqm,

200-L = 4L

200= 5L

L*= 40,

wages ( from supply curve ) = 2*40 = 80

CS =

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
In a coal-mining company town, one employer is the sole buyer of labor services. The labor...
In a coal-mining company town, one employer is the sole buyer of labor services. The labor supply curve is given by W = 7 + 0.01L. The marginal revenue product of labor is MRPL = 19 – 0.02L. 1) What is the firm’s marginal expenditure curve for labor? 2) What quantity of labor does it want to hire, and what wage will it pay? 3) What would the quantity of labor and wage be if the firm’s marginal revenue product...
In a coal-mining company town, one employer is the sole buyer of labor services. The labor...
In a coal-mining company town, one employer is the sole buyer of labor services. The labor supply curve is given by QL = –700 + 100W. Invertthelaborsupplycurvesothatthewageisexpressedintermsofthe quantity; then graph the quantity of labor supplied at each possible wage. Find the firm’s marginal expenditure curve,and graph it. Explainwhythefirm’smarginalexpenditureishigherthanthelaborsupply curve at all possible hiring levels.
Suppose you manage a firm, which is a monopsony in the labor market and a monopoly...
Suppose you manage a firm, which is a monopsony in the labor market and a monopoly in the product market. Suppose another firm moves into your market, hiring from the same pool of workers and selling an identical product to the same set of customers. Use the model of monopsony to analyze the impact of the new firm on the quantity of output you produce (Q), the price your firm should charge (P), the quantity of workers you employ (L),...
Under perfect competition, the demand curve facing a firm and the firm's marginal revenue curve are...
Under perfect competition, the demand curve facing a firm and the firm's marginal revenue curve are a. vertical at the firm's chosen output level b. both vertical, but the demand curve is further to the right than the marginal revenue curve c. both vertical, but the marginal revenue curve is further to the right than the demand curve d. both horizontal, but the demand curve is above the marginal revenue curve e. both horizontal at the level of the market...
2 Monopsony Suppose that the supply of quarterbacks is given by: w = $5, 000, 000...
2 Monopsony Suppose that the supply of quarterbacks is given by: w = $5, 000, 000 + 1, 000, 000L Further suppose that the marginal revenue product of professional basketball players is: MRPL = $29, 000, 000 ? 2, 000, 000L Suppose that we are in a monopsonisitic market. a) What is the optimal labor (LM) and wage (wM)? b) Find the buyer surplus. c) Find the producer surplus.
Suppose there is a single employer in the labor market, i.e. a monopsonist. The monopsonist faces...
Suppose there is a single employer in the labor market, i.e. a monopsonist. The monopsonist faces the (inverse) labor supply curve given by w = 15 + E and is a price-taker in the market for its output good, where it faces price p = $5. Suppose the monopsonist's technology is such that every worker produces 6 units of output. (a) What is the marginal cost of employment if the monopsonist is a non-discriminating one? (b) what is the equilibrium...
Suppose that the supply of quarterbacks is given by: w = $5, 000, 000 + 1,...
Suppose that the supply of quarterbacks is given by: w = $5, 000, 000 + 1, 000, 000L Further suppose that the marginal revenue product of professional basketball players is: MRPL =$29,000,000?2,000,000L Suppose that we are in a competitive market. a) What is the optimal labor (LC ) and wage (wC )? b) Find the buyer surplus. c) Find the producer surplus.
1. the supply function for farm labor is given by W = 2 + 4L. A...
1. the supply function for farm labor is given by W = 2 + 4L. A Government program raises W from the competitive value 82 to 90. Find the increase in worker surplus. 2. Demand and short-run supply are given by p=1/2 q :Supply p= 12-q :Demand a) Find the equilibrium values for P and Q. b) The government adopts a price support program setting the support priceequal to 6. Find the equilibrium levels of production, consumption, and the government...
Suppose a commodity tax is levied on a product. The supply curve is linear and upward...
Suppose a commodity tax is levied on a product. The supply curve is linear and upward sloping and the demand curve is linear and downward sloping. The tax lowers the consumer surplus by $300 and lowers the producer surplus by $200. The deadweight loss is $50. The government tax revenue is $[Answer]. Now, suppose we learned that the tax rate is $10 per unit. The equilibrium quantity after the tax must be [Answer]. Consequently, we conclude that the equilibrium quantity...
Suppose that a new ultimate frisbee league is monopsonistic and the supply of labor curve can...
Suppose that a new ultimate frisbee league is monopsonistic and the supply of labor curve can be described as Ls = − 700 + 100w. (where w is in thousands per season). Suppose also that the players’ marginal revenue product is MRPL = 19 − .02L. How will deadweight loss change in this market if the player’s union negotiates for a minimum wage of $11,000?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT