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Economics Model Answers Eleven (view source)
Revision as of 00:55, May 18, 2007
, 00:55, May 18, 2007no edit summary
1. A ________________ is one and only one buyer in a market.
1. A ________________ is one and only one buyer in a market.
'''Monopsony'''
'''monopsony'''
2. Why do you think an economics course spends so much studying monopolies and monopsonies?
2. Why do you think an economics course spends so much studying monopolies and monopsonies?
'''Sellers strive to be like monopolies, and buyers strive to be like monopsonies. While they never attain the perfect ideal, many come close enough to justify studying the perfect monopoly and perfect monopsonies.'''
'''A perfect circle does not really exist. But so many things come very close to this, and thus a perfect circle is worth studying in geometry.'''
Intermediate:
Intermediate:
3. What is the marginal factor cost of a monopsony when it increases is wage for 10 employees from $11 to $12 in hiring an 11th employee? Show your work.
3. What is the marginal factor cost of a monopsony when it increases is wage for 10 employees from $11 to $12 in hiring an 11th employee? Show your work.
'''This is the cost of the new employee ($12) plus the additional cost of ($12-$11) for all the existing employees in raising their salary to $12. The total is thus:
:'''marginal factor cost = $12 + ($12-$11)x10 = $12 + $10 = $22'''
4. In terms of P, MP, and W, state when a company in a competitive market hires an additional worker at wage W.
4. In terms of P, MP, and W, state when a company in a competitive market hires an additional worker at wage W.