Problem:

i) The  inverse market demand curve for a Stackelberg leader and follower is given by  P = 10  - Q. If each has  a marginal cost of $4, what will be the equilibrium quantity and price for each producer?

ii) After graduating from high school, Paul is thinking about enrolling in a one-year course in e-commerce. The direct costs of the course are $2,200 and the opportunity cost is $4,800. Upon completion of the course, he plans to work at Rhythm Corporation for three years and then retire. The incremental income he anticipates because of his training is $3500, $4,000 and $4,500 for the three years he intends to work. The relevant interest rate is 10%. Is the decision to enroll in the data processing course rational? Discuss.

iii) Suppose a firm is a monopsonist in the labour market it hires. Its MRP of labour is 3L² - 2L and the wage rate is W = 8 + 4L. How much labour the firm will hire and what wage rate it will pay?

iv) "Profit-maximizing firms lack incentive to provide job safety, and consequently, the government must intervene legislatively to protect workers against the unsafe working conditions that will surely result." Evaluate this statement.