Chapter 11, Problem 11.31P

Supply Function. A review of industry-wide data for the jelly and jam manufacturing industry suggests the following industry supply function Q = - 59,000,000 + 500,000P - 125,000PL - 500,000PK + 2,000,000W   where Q is cases supplied per year, P is the wholesale price per case ($), PL is the average price paid for unskilled labor ($), PK is the average price of capital (in per cent), and W is weather measured by the average seasonal rainfall in growing areas (in inches).   A. Determine the industry supply curve for a recent year when PL = $8, PK = 10 per cent, and W = 20 inches of rainfall. Further, show the industry supply curve with quantity expressed as a function of price, and price expressed as a function of quantity.   B. Calculate the quantity supplied by the industry at prices of $50, $60, and $70 per case.   C. Calculate the prices necessary to generate a supply of 4 million, 6 million, and 8 million cases.

The employment of teaching assistants (TAs) by major universities can be characterized as a monopsony. Suppose the demand for TAs is W = 30,000-125Q, where W is the wage (as an annual salary) and n is the number of TAs hired. The supply of TAs is given by W = 1,100 + 75Q, and the marginal expenditure curve is ME = 1,100 + 150Q. a. If the university takes advantage of its monopsonist position, how many TAs will it hire? What wage will it pay? (Round your responses to two decimal places.) The university will hire TAs at a wage of $ per year.

Joe's Flat Pretzels is a dominant employer of manufacturing labor in the town of Pretzelville, PA. Their demand for labor can be represented by W=24-Q where Q is measured in hundreds of hours. The supply curve of labor is W=4+0.25Q. Because Joe's Flat Pretzel has market power in the labor market, their Marginal Cost of Labor is MC=4+.5Q. How many units of labor will Joe's hire? At what wage? Provide a graph illustrating this situation.