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?

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Answer 1 Interpreting the firstorder condition in the monopsony model The firstorder condition for a monopsonists profit maximization is pfLwLL wL 0 W... View the full answer