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9. Suppose that a monopsony faces a labor supply curve of Ls-2+2w. What wage does the firm paw if it wants to hire 10 workers
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Answer #1

Monopsony

Q9) a) L = 2 + 2w

L = 10

So, 10 = 2+2w

w* = 8/2 = 4

.

b) now , w = (L-2)/2

w = .5L - 1

ME Curve has twice the Slope of that of labor supply Curve

So ME, w = L -1

so for 10th worker

ME = 10-1 = 9 $

.

c) graph

20- (labor demand Curve MRPL ME Curve 1.5 -10 Labor supply labor market eqm V 2 5 10 15

eqm wage = 4

.

d) this bracket is from $ 4, till ME cuts the MRPL20- (labor demand Curve MRPL ME Curve -15 -10 Labor supply bracket labor market eqm V 2 5 10 15

E) at Competitive eqm

Labor supply & MRPL Curve cuts

20- (labor demand Curve MRPL ME Curve -10 Labor supply wc Competitive eqm labor market eqm 2 5 10 Ec 15

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