The labor market for NBA players is perfectly competitive. The Labor Supply curve is Q= -20+3w. The marginal expenditure curve is ME= (2Q+20)/3. The Labor Demand curve is Q=125-2w. The Marginal Curve is MR= (125-2Q)/2
A. Both the players and owners do not have market power. What is the perfectly competitive market equilibrium wage and number of players employed?
B. The players still do not have market power but the owners have organized into the league and act as a single unit when hiring players. If the owners act as a monoponsonist what is the wage and number of players employed.
C. The players now have the market power and have organized into a union and the owners are completely unorganized and each one is acting on their own without market power. If the union acts as a monopoly what is the wage and number of players employed.
D. Given the answers to parts B and C, what is the size of the possible contract zone if both the owners and the players have market power.
E. What is the dead weight loss associated with the owners' monoposy in part b. What is the dead weight loss associated with the players' monopoly in part c.