Question

How do I describe an oligopsonistic model for a labor market? How do you set up the profit equation? And how do you find how firms decide what the amount of Labor will be ?

Answer 1

Ans:-Oligopsonistic market model is parallel to the oligopolistic model(here few sellers) market structure.In the oligopsonoc market only few large buyers or leading buyers for a product or services.This allow the buyer to apply a great deal of control over the sellers and can efficiently determines price of the products.Here buyers set the market price .The profit equation is the quantity of production where marginal revenue=marginal cost.A business firm hire labour's for helping the business and for producing output.The amount of labour of a firm depend up on the demand of output the labour produced on its cost of production,that include the amount of labour or the cost of labour also.