Exam 15: Factor Markets

Firm A is a monopoly.The demand for its output is p = 90 - Q.Production is such that Q = L.Firm A hires only unionized labor.The marginal cost to the union is $10 per unit of labor.The union will sell

Firm A is a monopsonist that faces a labor supply elasticity of 2.4 whereas Firm B is a monopsonist that faces a labor supply elasticity of 1.4.Which of these monopsonists pays a higher wage?

Why does a monopsonist's marginal expenditure curve lie above the labor supply curve?

Monopolization of either the labor market or the output market results in

The gap between the value a monopsony places on the last worker hired and the wage paid will increase when

Company towns are often decried as monopsonists.Why was it unlikely that another employer would move into a company town?

Suppose a monopoly producer is also a monopsonist in the labor market.Demand for the output is p = 100 - Q.The production function is Q = L,and the labor supply curve is w = 10 + L.How much labor does the firm hire? What wage is paid?

The profit maximizing condition for a firm selling its output in a competitive market and buying its resources in a competitive market is

Suppose the marginal product of labor equals 1/L.If the firm can sell its output for $10 per unit,and the wage is $1 per unit,how many units of labor will the firm hire?

Because the labor supply curve for a monopsonist is upward sloping,the monopsonist

If a firm is a price taker in both the labor market and the output market,it will

For a monopoly,the value of the next worker equals

Suppose that a mining company employs 80% of the available laborers in a town.Explain what will happen to the number of laborers hired and the wage rate paid by the mine if a minimum wage is set at the competitive level.

A monopoly's demand curve for labor

The labor supply curve for a monopsony is

After Hurricane Katrina destroyed much of the infrastructure of the United States Gulf Coast,

In the short run,the competitive firm will hire more labor if

For a competitive firm the marginal revenue product of labor is usually downward sloping.

XYZ Co.operates in a competitive market.Its production function is q = L^αK^β.The exponents,α and β,are both less than 1.The firm's capital is fixed,and it takes the wage and price as given.Derive the firm's short-run demand for labor as a function of K,w,and p.How does the firm react to an increase in the wage rate?

If a firm has market power in the output market but buys labor in a competitive market,it will hire the same quantity of labor that a competitive firm will.