Question 2 [word limit: 750] Assume a monopsony uses only one factor, i.e. labor, L, to produce a nal good, Q, which is sold in a competitive market at the price p = 1 to maximise prots. The production function of the monopsonist is given by Q(L) = 100L if}. The inverse supply curve for labor is W(L) = 20 + 2 L. c. Describe algebraically and graphically what the welfare effects would be of the introduction of a minimum wage set at the competitive level. Would it improve welfare if the minimum wage were set above the competitive wage? Support your answer with a graph and economic intuition. [15 marks]