Suppose a monopoly producer is also a monopsonist in the labour market. Demand for the output is p = 100 - Q. The production function is Q = L, and the labour supply curve is w = 10 + L.

a) Suppose the government introduces minimum wage w_min=35. What effect will this have on employment, output, and the firm's profit?

b) What would be the equilibrium wage and employment if the labour market were perfectly competitive? What will be the effect on the firm's output and profit?