Answer to Question #99181 in Microeconomics for annie

Question #99181
Assume a labor market with a non-discriminating monopsony. Assume the wage is 5$ when
monopsony employs 100 workers. Assume wage increase to 5,1$ when 1 more worker is employed. What is the marginal labor cost of the last worker?
1
Expert's answer
2019-11-24T16:21:38-0500
  • Monopsony market is market place where a firm has market power in employing factors of production (Land, Labour, Capital and Entrepreneurship.)
  • It is operating same as in the monopolistic market.
  • In monopolistic market there is one seller and many buyers, in monopsony market there is more sellers and only one buyer.



"Wage = 100 \\times \\$5"

"= \\boxed{\\$500}"


wage will increase by $5.1 when one more worker employed

No of workers 101


"Wage = 101 \\times \\$5.1"

"= \\boxed {\\$ 515.10}"

Extra wage payment "= \\$515.10 - \\$500"

"= \\boxed {\\$15.10}"


The marginal cost of the last labour or worker is "\\boxed{\\$15.10}"



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