Monopoly in Output Market and Monopsony in Labour Market.

TIME FRAMEWORK:

Short Run.

The production function of the business is given by: (1) Q = L

In the production function, Q is the annual output in tons, L is the number of workers employed. The Demand for the product is P = - Q. The wage rate is $ w = L.

In the short run, calculate the following:

a)The equilibrium number of workers employed.

b)The wage paid the Monopsonist.

c)The price charged by the Monopolist.