4. If a monopsonist employer can perfectly wage-discriminate in hiring its workforce there is no dead- weight loss associated with the monopsony. (a) Explain the above statement. (b) Why is wage discrimination generally illegal even though it improves our usual measure of wel- fare W (the sum of worker surplus and buyer or employer surplus) in the factor market? (c) If all employers in an economy were effectively monopsonists who could engage in perfect wage discrimination, what would the resulting allocation of society's output look like intuitively?

4. If a monopsonist employer can perfectly wage-discriminate in hiring its workforce there is no dead- weight loss associated with the monopsony. (a) Explain the above statement. (b) Why is wage discrimination generally illegal even though it improves our usual measure of wel- fare W (the sum of worker surplus and buyer or employer surplus) in the factor market? (c) If all employers in an economy were effectively monopsonists who could engage in perfect wage discrimination, what would the resulting allocation of society's output look like intuitively?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.5P

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Similar questions

What determines the demand for labor for a firm with market power in the output market?
What determines the demand for labor for a firm operation in a perfectly competitive out market?
Table 14.13 shows information from the supply curve for labor for a monopsonist, that is, the wage rate required at each level of employment. What is the monopsonists marginal cost of labor at each level of employment? If each unit of labors marginal revenue product is 13, what is the firms profit maximizing level of employment and wage?
Table 14.12 shows the quantity demanded and supplied in the labor market for driving city buses in the town of Unionville, where all the bus drivers belong to a union. What would the equilibrium wage and quantity be in this market if no union existed? Assume that the union has enough negotiating power to raise the wage to 4 per hour higher than it would otherwise be. Is there now excess demand or excess supply of labor?
What is the marginal cost of labor for a firm that operates in a competitive labor market? How does this compare with the MCL for a monopsony?
4. If a monopsonist employer can perfectly wage-discriminate in hiring its workforce there is no dead- weight loss associated with the monopsony. (a) Explain the above statement. (b) Why is wage discrimination generally illegal even though it improves our usual measure of wel- fare W (the sum of worker surplus and buyer or employer surplus) in the factor market? (c) If all employers in an economy were effectively monopsonists who could engage in perfect wage discrimination, what would the resulting allocation of society's output look like intuitively?
4. In a small isolated town in the Rocky Mountains the only firm that hires workers is a logging company. The firm's demand for labor and the town's supply of labor are as follows: Wage Quantity Supplicd Quantity Demanded $1 20 220 40 200 3 60 180 4 80 160 5 100 140 120 120 7 140 100 8. 160 80 180 60 10 200 40 a. How much labor will this profit maximizing monopsonist hire? (Assume that labor can only be hired in blocks of 20 units) b. What wage will the monopsonist pay to its workers?
The demand for unionized labor will generally be more elastic, and it will be more difficult for the union to achieve above-equilibrium wages, when: O there are few close substitutes for the unionized workers. O trade barriers limit the importation of the product produced by the unionized workers. O the cost of employing the unionized workers is a small part of the total cost of product that they produce. the demand for the product produced by the unionized workers is relatively price elastic. A strike, or the threat of one, is most likely to be effective when: O demand for the firm's product is weak. O foreign competition for the product is high. O the firm has a low product inventory. O demand for the product produced by the union workers is highly elastic.
1. Describe how the wage rate and level of employment are determined if the labor market is purely competitive. Contrast this with the wage rate and level of employment that would exist if the labor market was controlled by a monopsonist
3. For a profit-maximizing monopsonist (only person hiring), they will hire labor until the MCE=MRPE. Consult the following table which I have started to fill out. What is the optimal number of workers for this firm to hire if their product sells for $15. + Workers 0 12345 1 a. b. 2 C. 3 d. 4 Wage 0 3 9 21 30 39 MCE 3 15 111 Product/hour Revenue MPE N/A 5 0 SIIHE 5 9 12 14 15 $0 $75 $135 LER 4 T 110 F FOCUS MRPE N/A 75 60 40
$ MC of Labor P1 Labor Supply P2 P3 P4 VMPL/ Nabor Demand Quantity Labor The information above is from the labor supply and production function for a firm that operates as a monopsony employer. What wage would this firm charge to maximize profit? O P2 P4 О РЗ O P1
2. If a worker's wage decreases, the substitution effect says their choice of leisure will while the income effect says it will a. Increase, decrease b. Decrease, increase c. Increase, increase d. Decrease, decrease 3. For a profit-maximizing monopsonist (only person hiring), they will hire labor until the MCE-MRPE. Cortult the following table which I have started to fill out. What is the optimal number of workers for this firm to hire if their product sells for $15. Workers Wage MCE 0 3 0 1 N345 2 1234 a. b. 2 Cool d. 4 9 21 30 39 3 15 100 ** Product/hour Revenue MPE N/A 5 4 0 5 9 12 14 15 $0 $75 $135 TE D F Focus MRPE N/A 75 60 LILLE REE -