Labor Market Comparisons
Premium Paper Products (PPP) is the only employer in the small town of Gandor. PPP is a
monopsonist in the labor market and a perfect competitor in the paper market. When operating
in the short run, labor is its only variable resource. The graph above demonstrates the labor
market for PPP.
Looking at the graph, what kind of monopsonist is the firm? How can you tell?
Using the information in the graph, what is the profit maximizing quantity of labor