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III. Government policies and monopsony labor market: (30 marks) a. What happens to wages and employment if the government imposes a payroll tax on a

III. Government policies and monopsony labor market: (30 marks) a. What happens to wages and employment if the government imposes a payroll tax on a non-discriminating monopsonist? Compare the response in the monopsonistic market to the response that would have been observed in a competitive labor market. (15 marks) b. Suppose a firm is a perfectly discriminating monopsonist. The government imposes a minimum wage on this market. What happens to wages and employment? (15 marks)

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111. Government policies and monopsony labor market: (30 marks) a. What happens to wages and employment if the government imposes a payroll tax on a non-discriminating monopsonist? Compare the response in the monopsonistic market to the response that would have been observed in a competitive labor market. (15 marks) b. Suppose a rm is a perfectly discriminating monopsonist. The government imposes a minimum wage on this market. What happens to wages and employment? (15 marks)

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