6. Consider the following graph facing a monopsonist. W 29 22 16.50 13 MCL S 33 47 If this firm is a profit maximizer, it would pay what wage, w, and hire how many, L, workers? a. w $16.50; Z=47. b. w = $13; Z=33. c. w = $22; Z=33. d. w $29; Z=47. e. None of the above.

You are a labor economist trying to evaluate whether the labor market for computer scientists is competitive or monopsonistic. Based on previous research, you know that the production function for computers depends only on labor input: Y = -0.5L^2 + 10L; where Y is the output of computers and L is the quantity of labor used. The price of a computer is p = 2. You also know that the labor supply, as a function of the wage, for computer scientists is the following, where w is the wage per unit of labor: L = -10 + w. a. Find the equilibrium wages and employment (wc; Lc) that would prevail if the market for computer scientists were competitive. [Remember that a competitive firm takes the wage as given : that is, it assumes that the quantity of workers that it hires has no effect on the price of the next worker. (Of course, the equilibrium wage must equate demand and supply)].

B. Consider a firm who sells output at p=10 and has a short run production function Q(L)=20L-L2. Its wage rate function is w=40+2.5L. Suppose the firm is a monopsonist, how much labor will it hire to maximize profits?

The next 3 questions refer to the following: The table below shows a competitive firm's short-run production function. Labour is the firm's only variable input, and market price for the firm's product is $9 per unit. Labour Output 410 590 720 790 835 855 3 A W 4 5 6 7 8 The 5th unit of labour adds $ to the firm's total revenue. If the wage rate is $190, the firm will employ units of labour. If market price for the firm's product decreases to $3, at the same wage rate of $190 the firm will earn a profit of $