Question description
2. (10
points) 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.
Units of Labor Marginal Revenue Product
0
1 $30
2 $24
3
$18
4
$15
5
$12
6
$10
a. Drawthe
firm’s labor supply, labor demand and marginal resource cost curves.
b. What
will be the competitive equilibrium wage rate and the level of
employment?
c. What
will be the wage rate and the level of employment under monopsonistic
conditions?
