Appendix Questions and Problems

1. The figure below shows the supply of labor, marginal factor costs, and the demand for labor for a firm that is large enough that it is essentially a monopsonist in the community in which it operates. Assume that all workers are paid the same wage and that they work 2,000 hours per year (40 hours a week for 50 weeks).
   

   1. Question

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      ProbA 11 1a. What is the total wage bill (total wages paid by the firm) for this monopsonistic firm?

   2. Question

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      ProbA 11 1b. If the firm was actually hiring from a competitive labor market, what would be the total wage bill for the firm?

   3. Question

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      ProbA 11 1c. What is the total value of the monopsonistic exploitation of labor by this firm?

   4. Question

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      ProbA 11 1d. Is the firm a competitor or a monopolist in the product market?

2. Question

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   ProbA 11 2. Would unions be more likely to organize successfully in highly competitive markets or in markets with monopsony power? Explain.