ch14 - Chapter 14 Labour Markets Outline Monopsony and...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 14 – Labour Markets Outline Monopsony and Marginal Factor Cost Profit maximization for a Monopsonist o Exercise 14.2: Profit maximizing factor use for a monopsonist o Exercise 14.5: Profit maximizing factor use for a monopsonist who faces a union/minimum wage Monopsony and Marginal Factor Cost Def’n : A market with a single buyer. e.g : Mining company in a small town, Employers of teen-age labour. If a monopsonist pays all workers the same wage w L L w L TFC AFC = × = = Since a monopsonist is the ONLY buyer then the… AFC curve = the market supply curve Maria Gallego EC120 - Chapter 14– Labour markets 1 of 10
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Monopsony and Marginal Factor Cost Since the market supply curve slopes UPWARD the monopsonist must RISE WAGE (w) to buy (HIRE) more MFC equals the wage of the NEW workers PLUS the higher wages paid to existing workers. w L TFC MFC = MFC curve lies above the AFC curve Maria Gallego EC120 - Chapter 14– Labour markets 2 of 10 L 0 S = AFC L W 1 w A B w 1 = New wage L 0 = Existing workers w = wage raise needed to attract new workers L = new workers ∆Τ FC = ____________________ MFC = ∆Τ FC/ L = ____________
Background image of page 2
: If w = 10 + 2L then what is MFC? Maria Gallego
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 10

ch14 - Chapter 14 Labour Markets Outline Monopsony and...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online