Assume a firm is a monopsonist that can hire its first worker for $6 but must increase the wage rate by $3 to attract each successive worker (so that the second worker must be paid $9, the third $12, and so on). The marginal revenue product of labor is provided in the table below. Units of Labor Marginal Revenue Product 0 1 $30 2 24 3 18 4 15 5 12 6 10 a. Draw the firm's labor supply and marginal resource cost curves.
Assume a firm is a monopsonist that can hire its first worker for $6 but must increase the wage rate by $3 to attract each successive worker (so that the second worker must be paid $9, the third $12, and so on). The marginal revenue product of labor is provided in the table below. Units of Labor Marginal Revenue Product 0 1 $30 2 24 3 18 4 15 5 12 6 10 a. Draw the firm's labor supply and marginal resource cost curves.
Chapter11: Labor Markets
Section: Chapter Questions
Problem 3SQP
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1. Are the curves the same or different? If they are different, which one is higher?
A. They are the same.
B. They are different;the MRC curve is higher.
C. They are different;the labor supply curve is higher.
2. What is the competitive equilibrium wage rate?
$___?
What is the equilibrium level of employment?
___unit(s) of labor
3. What is the wage rate under monopsonistic conditions?
$___?
What is the equilibrium level of employment under monopsonistic conditions?
___unit(s) of labor
By how much does the monopsonistic reduce wages below the competitive wage?
$___?
By how much does the monopsonist reduce employment below the competitive level?
___unit(s) of labor
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