Question

Assume a mis amongst that can heitsfest work for $6 but must increase the wage rate by $3 to attract each successive workers that the second worker must be paid $9 the third $12.and so on. The main revenue product of labor is given in the table below Units of Labor Marginal Revenue Product a Draw the firm's labor supply and marginal resource cost curves Instructions: Use the tool provided to draw the labor supply curve plot 6 points to Then use the provided to the marginal revenue product curvelato Botal Finally the tool provided to the main resource costuve plot 6 points to locum credit for this graph you must piotar red points for each curve

Answer 1

MRC MRP Wage rate (dollars) 1 6 7 2 3 4 5 Quantity of labor

b)

Competitive wage is where MRP intersect labor supply.

According to the graph, Competitive wage is $15.

competitive equilibrium employment = 4 units of labor

c) Wage under monopsony is where the wage is corresponding to the labor units ( using labor supply) where  MRP intersect MRC.

According to the table, monopsony hires 3 units of labor and so the wage rate it accepts is $12.

Equilibrium wage = $12

Equilibrium employment = 3 labor units

D)

Monopsony reduces wages by $15 - 12 = $3 and

reduces employment level by 4-3 = 1 unit of labor.