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A firm’s Marginal Revenue curve (in class we called this also Marginal Value) is given by w=1200-2L, where w stands for the wage and L for the quantity of labor. The labor supply curve is given as w=L.
(a) Calculate the competitive outcome (i.e., L and w)
(b) Now calculate the unregulated monopolistic outcome.
(c) Compute the deadweight loss of an unregulated monophony.
(d) If the government imposed a minimum wage of $360 what will the resulting outcome (w and L) be?
e) What is the resulting DWL in the regulated monophony?
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