a. C. Suppose a typical courier in town has a production function of Q =40L -0.1L. She hires labor to deliver mails and small parcels in a competitive market at a price of $20 per unit. b. Suppose there are 20 identical couriers in the market. Based on (a), what is the market demand for labor, LMKT? If the market supply of labor is LSMKT=20W - 1000, what is the wage rate and total employment level? (3 marks) d. Find the Marginal Product of labor for this typical courier. Use it to find the Marginal Revenue Product of labor, and hence the demand for labor by this typical courier. (3 marks) Suppose the 20 couriers collectively hire labor through a single employment agent. As such, this agent possesses a monopsony power in employment. i. ii. What are the total employment level and the wage rate? Show your calculation. (Hint: You need to find the MRPL of the market, inverse market supply of labor, total expenditures and marginal expenditures of labor) Compare the employment level and wage rate in (b) and (c)(i). Comment on the welfare effects of the monopsony power in employment. (10 marks) Some economists believe that, in general, markets for unskilled labor like courier are unlikely monopsony markets, and hence minimum wage law does not help improve efficiency in the said labor market. What makes a labor market monopsony market? Why doesn't a market for unskilled labor like courier fit into a monopsony market? Briefly explain the plausible arguments. (4 marks)