Question
Labour Demand with Monopsony in the Labour Market and Perfect Competition in the Output Market in Short Run. Suppose a monopsony has a production function
Labour Demand with Monopsony in the Labour Market and Perfect Competition in the Output Market in Short Run.
Suppose a monopsony has a production function Q = 10L1/2
The firm sells its output in a perfectly competitive market at a price of $100
The supply of labor available to the monopsonist is given by w = 20L.
a) Determine the profit-maximizing level of employment and wage offered by the firm. b) Make a diagram.
c) Explain why Marginal Cost of Labour increases at a faster rate than the wage rate.
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Managerial Economics A Problem-Solving Approach
Authors: Luke M. Froeb, Brain T. Mccann
2nd Edition
B00BTM8FK0
