EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 13, Problem 13.6P
a
To determine
Numbers of workers to be hired, wage rate to be paid and comparison of wage rate to MRPL.
b)
To determine
Number of workers to be hired when it sells output as monopolist and its wage rate.
c)
To determine
Graphical representation of workers hired.
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Consider a firm that sells output at P = 5 and has a short-run production function:Q(L) = 20L − L^2. Its wage rate function is w = 40 + 2L.
- Suppose the firm is a monopsonist, how much labor will it hire to maximize profits?How much wage will it pay?- Solve for the rate of monopsonistic exploitation.- If instead, the firm is operating in a perfectly competitive market, how much laborwill it hire to maximize profits? How much wage will it pay?
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?
Imagine there is a firm that only uses labor to produce goods and that its production function is given by Y(L)=5L-L^2. The price of the firm’s output is equal to 1. Let’s assume the firm is a price taker on the product market but is a local monopsony for employment. Imagine that its marginal cost is given by 2+L. Imagine that labor supply is given by 1+L
How much labor does the firm want to use?
What will be the wage it pays?
How many people will work if the government imposes a minimal wage of 2.25?
How will this affect the firm’s profit? Calculate and compare before and after the introduction of the minimum wage.
Chapter 13 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 13.1 - Prob. 1MQCh. 13.1 - Prob. 2MQCh. 13.2 - Prob. 1TTACh. 13.2 - Prob. 2TTACh. 13.3 - Prob. 1MQCh. 13.3 - Prob. 2MQCh. 13.5 - Prob. 1MQCh. 13.6 - Prob. 1MQCh. 13.6 - Prob. 1TTACh. 13.6 - Prob. 2TTA
Ch. 13.6 - Prob. 1.1TTACh. 13.6 - Prob. 2.1TTACh. 13 - Prob. 1RQCh. 13 - Prob. 2RQCh. 13 - Prob. 3RQCh. 13 - Prob. 4RQCh. 13 - Prob. 5RQCh. 13 - Prob. 6RQCh. 13 - Prob. 7RQCh. 13 - Prob. 8RQCh. 13 - Prob. 9RQCh. 13 - Prob. 10RQCh. 13 - Prob. 13.1PCh. 13 - Prob. 13.2PCh. 13 - Prob. 13.3PCh. 13 - Prob. 13.4PCh. 13 - Prob. 13.5PCh. 13 - Prob. 13.6PCh. 13 - Prob. 13.7PCh. 13 - Prob. 13.8PCh. 13 - Prob. 13.9PCh. 13 - Prob. 13.10P
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- A monopsonist's demand curve for labor is given by w= 15 – 2L, where w is the hourly wage rate and L is the number of person-hours hired. a. If the monopsonist's supply (AFC) curve is given by w= 1L, which gives rise to a marginal factor cost curve of MFC = 2L, how many units of labor will he employ and what wage will he pay? Instructions: Round your answer for labor to 1 decimal place. Round your answer for wage to the nearest penny (2 decimal places). Labor: Wage: $ b. How would your answers to part (a) be different if the monopsonist were confronted with a minimum wage bill requiring him to pay at least $7/hr? Instructions: Round your answer for labor to 1 decimal place. Round your answer for wage to the nearest whole number. Labor: Wage: $arrow_forwardThe more elastic the labour supply is, the smaller the wage paid by a monopsonist. True Falsearrow_forward1. Consider a firm in a perfectly competitive industry that must decide how much labor to hire (in the short run, i.e., in the background the capital is fixed). The firm’s marginal product of labor is 110-5L. It takes as given an output price P = 2, and the wage = 20. a. Please calculate the optimal quantity of labor for this firm to hire within this setting. b. Would a monopsonist employer in this same situation hire more or less labor? Why? c. Discuss a possible basis for state regulations of employment within 'company towns'.arrow_forward
- Suppose that the production function of a salmon farming firm is given by F(L) = 4*root(L) and it faces a price for its product of P = 200. Moreover, the firm acts as a monopsony in the labour market - located in a small town in the south - and the supply curve is w(L) = 3 + L. We ask: (a) Determine the output and level of hiring. (b) How many workers should this firm hire from the point of view of the social optimum?arrow_forward3. A monopsonist's inverse demand for labor can be written as D-'(w) = VMP(E) = 40 – 0.005ED. Labor is supplied to the firm according to the inverse supply function S-(w) s(E) = w = 5+ 0.01E3. %3Darrow_forwardJacob owns company that offers jeans in a perfectly competitive product market. Jacob is a monopsonist in the labor market, and the table below shows the wages necessary for workers to supply their labor to Jacob's firm. Total Wage Bill Marginal Wage Employment Wage (TWB) Cost (MWC) 1 20 30 3 40 4 50 60 Question A Calculate the firm's total wage bill and marginal wage cost in each empty cell for the table above. Question B Referring to the table above, by how much does profit change with the hiring of the fourth worker if the marginal revenue product of the fourth worker is $90? 24 Question C Referring to the table above, if minimum wage was implemented by the government and set at a wage of $50, how would profit change for hiring the fourth work with a marginal revenue product of $90? $ Question D Assume now that the demand for labor is linear and is such that the firm would be willing to hire 1 worker for $80, 2 workers for $70, and so on. Using only the supply information in the…arrow_forward
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