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 = 10L^0.5

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.