Local non-discriminating monopsonist

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Reference no: EM13737909

Assume that Wal-mart is the only employer of retail workers in a small town in Indiana. As a local non-discriminating monopsonist, Wal-mart faces a labor supply curve given by: E = 10W –100, where E is the number of workers hired each hour and w is the hourly wage rate. Assume, the production function for Wal-Mart retail workers is given by Q=7E. Where the output (Q) has a price of $20 per unit in a perfectly competitive output market.

a. Find Wal-Mart’s Total Labor Cost and Marginal Cost.

b. Find Wal-Mart’s Marginal Cost

c. Find Wal-Mart’s Marginal Product of labor

d. Find Wal-Mart’s Value of the Marginal Product of labor

e. Find Wal-Mart’s profit maximizing level of employment, and the corresponding level of output.

f. Find Wal-Mart’s wage offer and Monopsonistic Exploitation.

Reference no: EM13737909

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