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Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
Edition 12ISBN: 978-1133189022Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
Edition 12ISBN: 978-1133189022 Exercise 9
Suppose that the supply of labor to a firm is given by
L = 100w
and the marginal expense of labor is given by
where w is the market wage. Suppose also that the firm's demand for labor (marginal revenue product) is given by
a. If the firm acts as a monopsonist, how many workers will it hire in order to maximize profits? What wage will it pay? How will this wage compare to the MRP L at this employment level?
b. Assume now that the firm must hire its workers in a perfectly competitive labor market, but it still acts as a monopoly when selling its output. How many workers will the firm hire now? What wage will it pay?
c. Graph your results.
L = 100w
and the marginal expense of labor is given by
where w is the market wage. Suppose also that the firm's demand for labor (marginal revenue product) is given by
a. If the firm acts as a monopsonist, how many workers will it hire in order to maximize profits? What wage will it pay? How will this wage compare to the MRP L at this employment level?
b. Assume now that the firm must hire its workers in a perfectly competitive labor market, but it still acts as a monopoly when selling its output. How many workers will the firm hire now? What wage will it pay?
c. Graph your results.
Explanation
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According to the question, the supply cu...
Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
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