Question: 3. Determine the post-minimum-wage equilibrium. The monopsony operates where its new marginal expenditure curve, ME2, intersects the demand curve. With the minimum wage, the demand

3. Determine the post-minimum-wage equilibrium. The monopsony operates where its new marginal expenditure curve, ME2, intersects the demand curve.

With the minimum wage, the demand curve crosses the ME2 curve at the end of the flat section. Thus, at the new equilibrium, e2, the monopsony pays the minimum wage, w2, and employs L2 workers.

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