A Firm Uses One Variable Factor, Labour, Which It Buys

question 89

Essay

A firm uses one variable factor, labour, which it buys as a monopsonist, to produce a single output. It sells the product in a perfectly competitive market. The firm's production function is: Y = - 7L² + 200L where Y is daily output in units and L is the number of workers employed. The output is sold at $.5 (50 cents)per unit. The supply of labour to the firm is: w(L)=28 + L
i)What is the number of workers employed ? What is the wage per worker?
ii)Calculate the deadweight loss;

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Definitions:

Germinal Period

The period that begins at conception and lasts until the developing organism becomes attached to the wall of the uterus about 8 to 10 days later.

Prenatal Development

Relates to the process of growth and development within the womb from conception to birth.

Heterogeneity

Variability in the levels of development of different parts of an organism at a given time.

Organism

A living entity characterized by the capacity for metabolism, growth, reaction to stimuli, and reproduction.