Interpret the first order condition in the monopsony model: pf ( L ) ( w ( L
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Question:
Interpret the first order condition in the monopsony model: pf ( L ) ( w ( L ) L + w ( L ) ) = 0 Specifically, discuss the role of each of the terms on the lefthand side of the equation in explaining how the firm ' s profit changes when it increases the number of workers it hires.
2 . Suppose a monopsonist produces output exclusively by hiring workers. Each unit ofoutput sells for $10 , and the firm pays workers $ 8 to produce each unit of output. How large is the markup and implied elasticity of labor supply to the firm?
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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