ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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 The local community contains many residents with PhDs who would like to teach as adjunct professors at the local university, which is the main employer of people with PhDs. The university’s demand curve or marginal value curve for adjunct professors is written:  W = 12,000 – 15Q, where W refers to the employer’s willingness to pay for an adjunct professor to teach one course.  Because the university faces the entire market supply curve for adjunct professors, the supply curve is upward sloping as hiring each additional adjunct requires offering a higher wage for all who are hired. The assumption that everyone is paid the same salary as required by the marginal worker leads to the university’s marginal expenditures rising faster than the supply curve.  The average expenditure curve (or supply curve) for teachers is written as: W = 4,200 + 25Q.   But assuming that hiring an additional teacher involves increasing the wage for all of the teachers hired, the marginal expenditures for teachers rises faster than the supply curve rises.  The marginal expenditure curve is written ME = 4,200 + 50Q. 

 

a.

How many teachers would be hired and at what wage per class if the market for adjunct professors were perfectly competitive? Show your work.   You do not need to draw a graph.

 

Wage paid per semester course taught W = ________

 

Quantity of adjunct professors hired Q = ___________

 

 

b.

Now determine how many adjunct professors would be hired if the university acted as a monopsonist? What would the payment be per semester class taught? Show your work.

 

Wage paid per semester course taught W = _________ 

 

 Quantity of adjunct professors hired Q = __________

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