Question:
Assume a firm is a monopsonist that can hire its first worker for $6 but must increase the wage rate by $3 to attract each successive worker. Draw the firm's labor supply and marginal resource cost curves and explain their relationships to one another. On the same graph, plot the labor demand data. What are the equilibrium wage rate and level of employment?
Units of Marginal
Labor Total Marginal Product Total Revenue
Labor Product Product Price Revenue Product$
0 0 $2
1 17 ------ 2
2 31 ------- 2
3 43 2
4 53 2
5 60 2
6 65 2