1. A monopsony occurs when there is a single_________. 2. For a monopsonist, the marginal labor cost...

Question:

1. A monopsony occurs when there is a single_________.
2. For a monopsonist, the marginal labor cost exceeds the wage because to hire more workers, the firm must_________.
3. A monopsonist hires workers to the quantity at which _________equals_________.
4. A monopolist sells its output at a relatively _________ (high/low) price, while a monopsonist buys its inputs at a relatively _________ (high/low) price.
5. Arrows up or down: If several hospitals in a city merge into a single hospital, we expect a _________in the nurse wage and a_________ in citywide nurse employment.
6. Job-related celebrations in pubs suggest that the labor supply curve is _________ (horizontal, positively sloped).
7. Elasticity of Supply. Consider the application, Pubs and the Labor-Supply Curve, which suggests that workers switch jobs to get a bigger producer surplus. Consider two types of workers, janitors in a large city and radiology technicians in a medium-size city with two hospitals.
a. Which type of worker is likely to get a larger change in producer surplus when switching jobs?
b. What are the implications for the supply curves facing the employers janitorial firms and hospitals?
8. Competition versus Monopsony. Consider the following data on the supply of labor and the demand for labor. The first three rows show the supply side of the market, and the last two rows show the demand side.

a. In the perfectly competitive outcome, the equilibrium wage is _________and the equilibrium quantity is _________.
b. In the monopsony outcome, the monopsonist chooses a quantity of _________and pays a wage of _________.
9. Effects of a Minimum Wage. Consider the monopsony depicted in Figure and

Note that the curves are linear with constant slopes a. Fill in the blanks in the following table, providing the relationship between the minimum wage and the number of workers hired.

b. Provide a general rule for the relationship between the minimum wage and the number of workers hired. As the minimum wage increases, the number of workers hired will increase if _________, but will decrease if _________.