S2 W7

For a gift shop that operates in a perfectly competitive market, the value of the extra output
produced by an additional unit of input is the ( ) of the ( ) product of labour.

Union Brew Lab ia a local monopoly and has a labour demand curve that can be expressed as w
= 18 - 3L, where w represents the hourly wage rate and L represents the number of person-hours
hired. Meanwhile, its supply (AFC) curve is w = 6L. Based on these curves, can you determine
how many units of labour Union Brew Lab will employ and what wage rate they will pay to their
workers?

If Butta Burger acquired most of the burger shops in Edinburgh in a formerly competitive market,
worked to construct barriers of entry against new firms, and gradually accumulated more and
more market power, how would the quantity of labour employed be affected?

The Edinburgh International Festival can sometimes be a winner take all market. What are
Winner-takes-all markets? Are they compatible with the theory of competitive markets where
workers receive compensation equal to their marginal products?

Black Medicine Coffee Co is hiring new workers for their cafe on Nicholson Street. In the Coffee underworld, they are rumoured to be a "monopsony". Which of the following is NOT a Monoposony:

• Monopsony is when there is only one buyer

• Monopsony is common in areas where one firm supplies most or all of their region's jobs

• Monopsony is generally when a single buyer has a controlling advantage that they can use to drive down their faced consumption prices.

• Monopsonies commonly experience higher prices from wholesalers and pay higher wages.

Pleasance hires workers in a monopsonistic labour market to maintain the gym equipment. The graph shown here illustrates Pleasence's marginal factor cost of labour (MFC), the supply of labour (S), and the marginal revenue product of labour (MRPL) for workers. Using the graph below, what area represents the deadweight loss in this monopsony labour market?

They say the Meadows become even more beautiful when you can understand labor market definitions. Hence, correctly distinguish which statements are true or false:

1. 1. The short-run demand for labour of a perfectly competitive firm affected by the law of diminishing returns is downward sloping.

1. 2. A perfectly competitive firm’s long-run demand for labour tends to be less elastic than its short-run demand for labour.

1. 3. The market demand for labour in a perfectly competitive industry is normally steeper than the line obtained by horizontal summation of individual firms’ labour demand curves.

• True, False, True

• False, False, True

• True, True, False

• True, False, False

Aikman's Basement secretly runs an underground shopping centre and is a monopsonist in the labor market. The demand curve for new workers is given by w=12 - 2L, where w is the hourly wage and L is the number of person-hours hired. If the monopsonist’s supply (AFC) curve is given by w = 2L, how many units of labour will he employ and what wage will he pay?

EUSA is the sole supplier of security systems in the product market and the sole
employer of locksmiths in the labour market. The demand curve for security systems
is given by P = 100 - Q, where Q is the number of systems installed per week. The
short-run production function for security systems is given by Q = 4L, where L is the
number of full- time locksmiths employed per week. The supply curve for locksmiths
is given by W = 40 + 2L, where W is the weekly wage for each locksmith. How many
locksmiths will Acme hire, and what wage will it pay?

A firm produces output according to the production function Q = K1/2L1/2. If it
sells its output in a perfectly competitive market at a price of 10, and if K is fixed at
4 units, what is this firm’s short-run demand curve for labour?