Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 29, Problem 11E
To determine
To explain:
The difference between the perspectives for Company Wand whether Company W is a monopsonist or not.
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How should a monopsonist decide how much of a product to buy? Will it buy more or less than a competitive buyer? Explain.
The demand for labor for a firm operating in a perfectly competitive output market equals ____.
The demand for labor for a firm with market power in the output market equals ______.
Would you expect the presence of labor unions to lead to higher or lower pay for worker-members? Would you expect a higher or lower quantity of workers hired by those employers? Explain briefly.
The table below shows the total product for Car Suds, a car wash service. The market for car washes is perfectly competitive and car washes sell for $5 each. The wage rate paid to workers is $50 per day.
Fill in the table. How many workers will the firm hire to maximize profits?
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- If the sole employer in a market is a monopsonist, the equilibrium number of workers hired will be ___ and the equilibrium wage will be ___ than they would be in a perfectly competitive market. a.Higher; higher b.Lower; higher c.Higher; lowerarrow_forwardThe more elastic the labour supply is, the smaller the wage paid by a monopsonist. True or False?arrow_forwardIf the sole employer in a market is a monopsonist, the equilibrium number of workers hired will be ___ and the equilibrium wage will be ___ than they would be in a perfectly competitive market. a.Higher; higher b.Lower; higher c.Higher; lower d.Lower; lowerarrow_forward
- On a clearly labeled graph, show what happens to wages paid and employment if the government imposes a payroll tax on a monopsonist? Should the change in wages paid and employment be larger for a monopsonistic labor market or a perfectly competitive one? Explain your answer. Don't copy pastearrow_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_forward1. Use the graph to answer the question that follows. If the price is set to P1, what area represents the producer surplus in the graph shown above? D B + C + D C + D + F B + C + D + G B + C + D + E + F 2. The graph below represents the labor supply curve of a monopsonistic firm. What is the quantity of labor and the wage that will maximize the firm's profits? Firm's profits are maximized at quantity = Q1 and wage = W4 Firm's profits are maximized at quantity = Q2 and wage = W3 Firm's profits are maximized at quantity = Q2 and wage = W5 Firm's profits are maximized at quantity = Q3 and wage = W1 Firm's profits are maximized at quantity = Q1 and wage = W2arrow_forward
- In the following graph, the product market is whilc the labor market is MFC W. VMP Wa O perfectly competitive: a monopsonist Oa monopoly: competitive A monopoly:amonopsonist perfectly competitive: competitive Rate aagearrow_forwardConsider a profit-maximizing cotton candy firm that operates in a perfectly competitive output and labor market. Suppose there is a decrease in the price of good X, and the cross-price elasticity of demand for cotton candy with respect to good X is positive. How does this impact: a. the wage paid to cotton candy workers b. the amount of labor hired by the cotton candy firm? Explain and show using well-labelled graphs.arrow_forwardExplain how a monopsony market structure is affected by a price floor (minimum wage), and what is the effect of the monopsony of the local economy?arrow_forward
- On a clearly labeled graph, show what happens to wages paid and employment if the governmentimposes a payroll tax on a monopsonist? Should the change in wages paid and employment be larger for a monopsonistic labor market or a perfectly competitive one? Explain your answerarrow_forwardFirm MFC $20 18 Supply Labor 16 14 12 10 MRP = Demand 8. 0 1 2 3 Workers 4 per day The graph above displays a monopsony in the labor market. Use the graph to answer the following questions: A. Assume the monopsonist is profit-maximizing. The monopsonist should set the wage to [Select] to reach the goal of hiring [ Select ] workers. MAY Dollars perarrow_forwardThe table below shows the total product for Car Suds, a car wash service. The market for car washes is perfectly competitive and car washes sell for $5 each. The wage rate paid to workers is $50 per day.arrow_forward
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