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Suppose a firm is the sole employer in town, facing a labor supply curve w(L) = 2L. This monopsony is a price taker in the

  1. Suppose a firm is the sole employer in town, facing a labor supply curve w(L) = 2L. This monopsony is a price taker in the output market and has demand for labor DL= 200-L (this is the marginal revenue product of labor). Calculate the total L demanded, profits, producer surplus, consumer surplus and DWL for this monopsony and compare these results to perfect competition.

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