LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Question
Chapter 4, Problem 11RQ
To determine
The impact of imposing of a minimum wage on the level of employment and wages.
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Students have asked these similar questions
Consider the graph at right for a monopsonistic labor market.
The competitive wage is $750.00 per hour, and the competitive labor use is 62.50 workers.
In a monopsonistic labor market, the amount of labor used will be 41.7 workers and the wage will
be $ per hour (round your answer to the nearest penny).
(Round all of the following answers to the nearest dollar.)
In a monopsonistic labor market, consumer surplus will be $ ; the monopsonistic labor market
producer surplus will be area $, and the monopsonistic labor market producer deadweight loss
will be $
w, wage per hour
1400.00-
1200.00-
1000.00-
800.00-
600.00-
400.00-
200.00-
Monopsonistic Labor Market
833.33
0.00+
0.0
41.7
40.0
L, Workers per hour
80.0
ME
S
D
Q
What would you expect to happen to wages in a monopsonistic labor market?
True, False, and Explain.
If labor is hired in a monopsonistic market, a minimum wage will always guarantee employment will increase.
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Similar questions
- If the labor market were a monopsony, would the monopsonist hire more, fewer, or the same number of workers as Que to maximize its profit?arrow_forwardMinimum wage is an example of what kind of economicarrow_forwardWhat would happen if the labour market is dominated by a monopsonist, and the government sets a minimum wage that is above the competitive wage? please answer with graphsarrow_forward
- True or false. When a labor market consists of a single monopsony buyer of labor interacting with a single monopoly seller of labor (such as a trade union), the resulting quantity of labor that is hired will always be inefficiently low.arrow_forwardUnder monopsony, wages that are paid are higher than reservation wage. True Falsearrow_forwardUnder monopsony, the interaction of supply and demand determines wages and number of workers employed. True Falsearrow_forward
- Assume 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_forwardYou are less likely to find a monopsonistic labor market in a large city such as Philadelphia, Pennsylvania then in a small town such as Dry Creek, Wyoming. true or falsearrow_forwardOn 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_forward
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