1. Assume that the employees of the monopsonist in Problem 2 organize a strong i
ID: 1186513 • Letter: 1
Question
1. Assume that the employees of the monopsonist in Problem 2 organize a strong industrial union. The union demands a wage rate of $16 for its members, and the monopsonist decides to pay this wage because a strike would be too costly.
a. In the following table, compute the supply schedule for labor that now confronts the monopsonist by completing column 2.
(1)
Number of labor units
(2)
Wage rate
(3)
Total labor cost
(4)
Marginal labor cost
0
$_____
$_____
1
_____
_____
$_____
2
_____
_____
_____
3
_____
_____
_____
4
_____
_____
_____
5
_____
_____
_____
6
_____
_____
_____
7
_____
_____
_____
8
_____
_____
_____
b. Compute the total labor cost and the marginal labor cost at each level of employment and enter these figures in columns 3 and 4.
c. The firm will hire ________ units of labor, pay a wage of $___________, and pay total wages of $___________.
d. As a result of unionization, the wage rate has ______________, the level of employment has _______________, and the earnings of labor have _______________.
(1)
Number of labor units
(2)
Wage rate
(3)
Total labor cost
(4)
Marginal labor cost
0
$_____
$_____
1
_____
_____
$_____
2
_____
_____
_____
3
_____
_____
_____
4
_____
_____
_____
5
_____
_____
_____
6
_____
_____
_____
7
_____
_____
_____
8
_____
_____
_____
Explanation / Answer
Information about hours and marginal cost are missing.
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