Assume a firm is a monopsonist that can hire its first worker for $6 but must in

Question

Assume a firm is a monopsonist that can hire its first worker for $6 but must increase the wage rate by $3 to attract each successive worker (so that the second worker must be paid $9, the third $12, and so on). The marginal revenue product of labor is given in the table below.

Draw the firm’s labor supply and marginal resource cost curves.

Instructions:
1. draw the labor supply (LS, 6 points plotted), marginal revenue product (MRP, 6 points plotted)

2. What will be the competitive equilibrium wage rate and the level of employment?

Equilibrium wage = $________

Equilibrium level of employment = ________ units of labor

Explanation / Answer

1. This one you're gonna have to do yourself. Just draw a graph and on the horizontal (x) axis put MRP and on the vertical (y) axis put LS and then plot the two lines using the data from the graph. 2. The competitive wage rate will be $18 and the level of employment will be 3.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.