National Hospital is the only employer of nurses in the country of Castoria, and it acts as

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National Hospital is the only employer of nurses in the country of Castoria, and it acts as a profit maximizing monopsonist in the market for nursing labor. The marginal revenue product for nurses is w = 50 - 2N, where w is the wage rate and N is the number of nurses employed (measured in hundreds of nurses). Nursing services are provided according to the supply schedule w = 14 + 2N.
a) How many nurses does National Hospital employ, and what wage will National pay its nurses?
b) What is the deadweight loss arising from monopsony?
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Microeconomics

ISBN: 978-0073375854

2nd edition

Authors: Douglas Bernheim, Michael Whinston

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