A Monopsonist Only Uses Labor to Produce an Output According

question 6

Multiple Choice

A monopsonist only uses labor to produce an output according to production function Q = 2L, where Q is output and L is labor. The output sells for a price of $20 per unit. The supply curve for labor can be written w = 4+L. What is the monopsonist's demand for labor in this market?

• A)L = 12.
• B)L = 18.
• C)L = 22.
• D)L = 24.

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Definitions:

Budget Set

The collection of all possible combinations of goods and services that a consumer can afford with a given budget at current prices.

Price Reduced

A decrease in the cost at which goods or services are sold, typically to stimulate demand or clear inventory.

Positive Prices

Prices that are above zero, indicating that goods or services have a monetary value that consumers need to pay to acquire them.

Horizontal Intercept

The point at which a curve or line intersects the horizontal axis on a graph, often representing a variable's value when another variable is zero.