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Chapter 29: Q.20 (page 667)

Consider Figure 29-6. Suppose that the vertical distance to point A is \(50 per hour, that the value of Wm is \)20 per hour, and that Qm is 1,000 worker-hours. How much more or less each hour does the monopsonist have to pay each worker as an hourly wage rate to attract 1,000 worker-hours of labor input than the additional cost that the firm incurs in hiring the 1,000th unit of labor?

Short Answer

Expert verified

The monopsonist have to pay each worker as an hourly wage rate to attract 1000worker-hours of labor is$20 per hour

Step by step solution

01

Given Information

If the Monopsonist brings to the table higher wages. It faces a vertical inclining supply bend for work. To enlist more specialists, it needs to raise wage rates, including the compensation of all its ongoing labourers. In this manner, the marginal cost of recruiting one more unit of work is rising.

02

Explanation

The Monopsonist picks the ideal amount of work where marginal element cost (MFC) curves and the marginal revenue item (MRP) curves for work across one another.

In the accompanying chart, we can see that MFC and MRP are converging each other at point 'A', however, the ideal compensation is not entirely settled on the supply bend of a work. Subsequently, the ideal compensation rate will be $20each hour and the ideal amount of work will be1000work units.

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Most popular questions from this chapter

Outline the essential history of the labor union movement and discuss the current status of labor unions.

Explain the impact of each of the following events on the domestic market for union labor.

a. Union-produced TV and radio commercials convince consumers to buy domestically manufactured clothing instead of imported clothing.

b. The union sponsors periodic training programs that instruct union laborers about the most efficient use of machinery and tools.

Suppose that the objective of a union is to maximize the total dues paid to the union by its membership. Explain the union's strategy, in terms of the wage level and employment level, under the following two scenarios.

a. Union dues are a percentage of the total earnings of the union membership.

b. Union dues are paid as a flat amount per union member employed.

Take a look at Figure 29-5. Suppose that the monopsonist is contemplating whether it might consider hiring 7 units of labour per time period. To induce 7 units of labour to be supplied by workers, the firm would have to pay an hourly wage rate of $24 per hour. What would be the marginal factor cost of hiring a 7th unit of labour per time period?

Explain the impact of each of the following events on the domestic market for union labor.

a. Union-produced TV and radio commercials convince consumers to buy domestically manufactured clothing instead of imported clothing.

b. The union sponsors periodic training programs that instruct union laborers about the most efficient use of machinery and tools.
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