Labor Economics
7th Edition
ISBN: 9780078021886
Author: George J Borjas
Publisher: McGraw-Hill Education
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Question
Chapter 4, Problem 4P
a)
To determine
Effect of payroll tax on the wage and employment of a monopsony market.
b)
To determine
Effect of minimum wage imposition on wage and employment of a perfect discriminating monopsony.
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a. What happens to wages and employment if the government imposes a payroll tax on a monopsonist? Compare the response in the monopsonistic market to the response that would have been observed in a competitive labor market.b. Suppose a firm is a perfectly discriminating monopsonist. The government imposes a minimum wage on this market. What happens to wages and employment?
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 answer
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.
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- Table 14.13 shows information from the supply curve for labor for a monopsonist, that is, the wage rate required at each level of employment. What is the monopsonists marginal cost of labor at each level of employment? If each unit of labors marginal revenue product is 13, what is the firms profit maximizing level of employment and wage?arrow_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_forwardHow should a monopsonist decide how much of a product to buy? Will it buy more or less than a competitive buyer? Explain.arrow_forward
- 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 Qarrow_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; lowerarrow_forwardTrue, False, and Explain. If labor is hired in a monopsonistic market, a minimum wage will always guarantee employment will increase.arrow_forward
- 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; lower d.Lower; lowerarrow_forwardThe more elastic the labour supply is, the smaller the wage paid by a monopsonist. True or False?arrow_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_forward
- a) What are the effects of the minimum wage in the perfect labor market? Draw a diagram and explain shortly. b) How could these effects change in case of the monopsonistic market? Explain shortly. c) List one reason why the effect of the minimum wage could be different in the monopsonistic market relative to the perfect market.arrow_forwardQuestion 14 For a monopsonist, the marginal factor cost is always: equal to the wage rate. less than the wage rate. greater than the wage rate the same as the labor supply. the same as the labor demand. Question 17 A monopsonist will hire more workers than will be hired in a competitive labor market. True False Question 19 Which of the following statements is true about monopsony? c and e. c, d, and e. Monopsonists exercise complete buying power. Monopsonists maximize profit by setting MRP = MFC. Monopsonists face the whole labor supply curve Question 20 A decrease in the price of the output will decrease the firm's demand for labor. True Falsearrow_forwardTrue 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_forward
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