EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 14, Problem 6QR
To determine
Describe the effects of film studio merging in the wages of film stars.
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small hospital in rural Alaska is a monopsony employer of nurses. The nurses unionize. They have little power at the bargaining table, but they do bargain for a slightly higher wage. What happens to the number of nurses employed? What happens to labor costs and marginal labor costs?
Refer to the graph. Comparing monopsony with pure competition in the sale of output and hiring of labor services, the difference in the wage rate will be:
A: W1-W2
B: W2-W3
C: W1-W3
D: W0-W1
Under monopsony, wages are determined by:
Demand curve
Marginal Labour Cost curve
Intersection of MLC and Demand curve
Interesection of MLC and Supply curve
Supply Curve only
Chapter 14 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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- Can a monopsony exercise monopsony power if the supply curve it faces is horizontal? Why or why not? Explain with detail.arrow_forwardA monopsonist faces a market labor supply curve w=20+L where w is wage rate and L is the number of workers employed. If the firm's labor demand curve is w=200-4L, what is the optimal wage rate and quantity of labor employed?arrow_forwardThe inverse labour demand curve of a monopsonist employer is W = 38,500 – 112L, where W is the annual salary and L is the number of workers hired. The labor supply is given by W = 10,700 + 100L. (a) The marginal expenditure equation is ME= . Do not include a comma in your answer. Please use capital letters (e.g. L not l) (b) To the nearest integer, the monopsonist would hire workers and, given that number of workers, the salary they would pay is, rounded to 2 decimal places (e.g. 4.12) . Do not include a comma in your answer.arrow_forward
- Consider a monopsonist that hires 4.28 units of labor at a wage of 19.26. If the marginal value placed on the last worker hired is 41.22 a.) what is the elasticity of labor supply for this monopsonist?arrow_forwardWe discussed the impacts of both a monopsony as well a monopoly on the labour market. Combine the results of these two situations to discuss the ramifications on wages and employment if a firm was both a monopoly and monopsony.arrow_forwardAssume a monopsony uses only one factor, i.e. labor, L, to produce a final good, Q, which is sold in a competitive market at the price p = 1 to maximise profits. The production function of the monopsonist is given by Q (L) = 100L - 1L². The inverse supply curve for labor is w(L) = 2 20 + 2 L. a. Derive and describe the monopsony's inverse demand curve for labor. b. Describe algebraically and graphically how many units of labor the monopsony hires and at what wage. Describe the nature of monopsony power and provide economic intuition.arrow_forward
- [Q: 11-9412503] Consider a monopsonist that hires 5.17 units of labor at a wage of 21.71. If the marginal value placed on the last worker hired is 47.92, what is the elasticity of labor supply for this monopsonist? Elasticity of labor supply: (Enter your answer rounded to two decimal places)arrow_forwardWhich of the following is characteristic of a labor market that is a monopsony? Multiple Choice О The supply curve for labor lies above the marginal resource cost curve of the firm. О The type of labor available is relatively mobile from one industry to another. The firm's employment is a small portion of the total employment of that type of labor. The wage rate the firm must pay varies directly with the number of workers it employs.arrow_forwardThe 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.arrow_forward
- 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_forwardAssume a monopsony uses only one factor, labor, L, to produce a final good, Q, which it sells in a competitive market at the price, p = 1. The inverse supply curve for labor is w = 20 + 2L. If the monopsony's labor demand curve is w = 70 - L, how many units of labor does it hire and at what wage? What value does the monopsony place on the last worker hired? How does the monopsony equilibrium %3D compare to the competitive equilibrium?arrow_forwardThe graph below represents the labor supply curve of a monopsonistic firm. If the firm above hired labor at the quantity Q1, what wage rate would it pay? A-W1. B-W2. C-W3. D-W4. E-W5arrow_forward
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