Economics 19th Edition by Stanley Brue, Cambell McConnell, Campbell McConnell, Sean Masaki Flynn, Sean Flynn

Exercise 3

Assume a firm is a monopsonist that can hire its first worker for $6 but must increase the wage rate by $3 to attract such successive worker (so that the second worker must be paid $9, the third $12, and so on).
a. Draw the firm's labor supply and marginal resource cost curves. Are the curves the same or different If they are different, which one is higher
b. On the same graph, plot the labor demand data of question 2 in Chapter 12. What are the equilibrium wage rate and level of employment |
c. Compare these answers with those you found in problem 2. By how much does the monoposonist reduce wages below the competitive wage By how much does the monopsonist reduce employment below the competitive level