Data in the Following Table Refer to the Purchase of a Resource

question 73

Essay

Data in the following table refer to the purchase of a resource by a pure monopsonist. Let the resource be labor time L, measured in hundreds of hours per day.
Units of Labor Marginal Average Marginal Revenue
Input Expenditure Expenditure Product
L ME AE MRP
1 10 10 16
2 12 11 15
3 14 12 14
4 16 13 13
5 18 14 12
6 20 15 11
7 22 16 10
8 24 17 9
a. Determine the profit maximizing purchase rate of labor for the monopsonist.
b. If this market were not monopsonistic but competitive, what would be the purchase rate of labor time?
c. Determine the equilibrium wage rate in both the monopsonistic and competitive markets.

Analyze the impact of external factors such as technology, income, and consumer preferences on market equilibrium.

Grasp the principles of excess supply (surplus) and excess demand (shortage) and how they lead to adjustments in market prices.

Recognize the role of production costs and factor inputs on the supply side of the market.

Interpret market scenarios to determine the directional change in equilibrium price and quantity given shifts in supply and demand.

---

Definitions:

Repression

Keeping the unconscious from consciousness by pushing it away.

Moving Against

Gaining control in a competitive world through exploitativeness and aggressiveness.

Moving Toward

Connecting with others as a way of dealing with anxiety.

Moving Away

Trying to find peace by avoiding others and escaping conflict.