FREE RESPONSE QUESTION #2: Supply of Labor 15 12.5- 10 Marginal Revenue Product 25 50 100 150 200 250 300 QUANTITY In Hogsmeade everyone works for Dervish and Banges Ltd., the local magic wand factory. Dervish and Banges Lid. is a monopsonist in the labor market and a perfect competitor in the wand market. In the short run, labor is the only variable input. The labor market for Dervish and Banges is given in the graph above. (a) Identify the profit-maximizing quantity of labor for Dervish and Banges. (b) Identify the wage rate Dervish and Banges pays to hire the profit-maximizing quantity of labor. (c) Identify the quantity of labor hired if they operate in a competitive labor market