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Kalamma, a cloth trader owns a large garment factory on an isolated island. Kalamma's factory is the only source of employment for most of the islanders, and thus she acts as a monopsonist. The supply curve for garment workers is given by: L =90w, where L is the number of workers hired and w is their hourly wage. Assume also that Kalamma's labor demand (marginal revenue product) curve is given by: L = 500 - 50MRPL
a) How many workers will Kalamma hire to maximize her profits, and what wage will she pay?
b) Assume now that the government implements a minimum wage law covering all garment workers. How many workers will Kalamma now hire, and how much unemployment will there be if the minimum wage is set at $5 per hour?
c) Graph your results.
d) How does a minimum wage imposed under monopsony differ in results as compared with a minimum wage imposed under perfect competition? (Assume the minimum wage is above the market-determined wage.)
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Complete the chart below for a firm that is operating under conditions of perfect competition where the market price is $22. What level of output maximizes the firm's profits Quantity -21,22,23,24 Price Total Revenue Marginal Revenue
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Workers in Wet Seal and Forever 21 stores are considering forming unions in each store. The potential unions have information on labor demand. For Wet Seal, when the wage rises from $8 to $10, Wet Seal will reduce labor demand from 800 to 700.
Etisalat and Du are duopolists. If they form a cartel between themselves, then what will happen to price and output in the market. Discuss your answer with a relevant diagram.
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an automobile -manufacturing company is considering purchasing an industrial robot to do spot welding , which is currently done by skilled labor . the initial cost of the robot is $210,000, and the annual labor savings are projected to be $150,000
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A spike in the unemployment rate - the biggest in more than two decades - raised new concerns Friday that a weak labor outlook, high oil prices and continuing woes in the housing and credit markets are leading the U.S. economy into a painful reces..
Hours of operation Marginal cost 1 4 2 8 3 12 4 16 5 20 6 24 7 28 45) Julianne runs a business and needs to decide how many hours to stay open. Table 2.2 illustrates her marginal costs of staying open for each additional hour.
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