A Monopsonist Uses Only Labor (L)to Produce Her Output (Q)which

question 45

Essay

A monopsonist uses only labor (L)to produce her output (Q)which she sells in a competitive market at the fixed price P=3. The production function is Q=15L²- 0.2L³ and the labor supply function is w=144+23.4L.
a)Determine the profit- maximizing values of L, Q, and w.
b)Explain why you have chosen the answer that maximizes profit instead of one that minimizes it.

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Definitions:

All-Or-None

A principle stating that the strength of a response of a nerve or muscle fiber is not dependent on the strength of the stimulus; if a stimulus is above a certain threshold, a nerve or muscle fiber will fire with full strength.

Neuron Fires

The process by which a neuron activates and transmits an electrical signal down its axon, triggering communication with other neurons or muscle cells.

Partial

Relating to or constituting a part of something as opposed to being whole or complete.

Myelin

A fatty substance that surrounds and insulates the axons of some neurons, enhancing the speed and efficiency of electrical impulse transmission.