1. Consider the behavior of a firm that has market power in the market for the labor that it uses as an input.

a. What is the tradeoff that it faces in its hiring decisions?

b. drawn and fully labeled diagram to illustrate the firm's hiring decision. Show the deadweight loss that results from the firm's market power.

c. Describe how the market outcome is likely to be affected by a labor union that sets a minimum wage rate in the market. Will the union make the market more efficient or less efficient?