A Company is a competitive company engaged in Information and Technology (IT). A Company produces

output at market price level, = 20. The production function of the company in the short term is ,

where is the amount of output and is the number of IT workers the company employs.

a. A year ago, A Company operated in one of the regions in one developed country. The wage rate for workers

in the region is = 700. What was the optimal number of workers employed by the A Company at that

time? Draw a diagram to show what happens and explain it.

b. Currently, A Company has opened a branch in one of the regions in one developing country. In this area,

there are many new graduates from local universities in the IT field. As A Company is the only IT company in

the region, it has monopsony power in the IT worker market. The supply function of IT workers, as well as the

firm's average expenditure, is expressed as

i. What is the optimal number of workers employed by A Company in this new area? What is the wage rate?

ii. If the company cannot use its monopsony power, what is the optimal level of wages and workers?

iii. Explain how firm's hiring decision if worker can join worker union. The union use their power to influence wage

in worker market. However, firm may hire worker outside worker union. You have to use relevant figure(s) in your

explanation