Problem
National Hospital is the only employer of nurses in the country of Castoria, and it acts as a profit maximizing monopsonist in the market for nursing labor. The marginal revenue product for nurses is w =50 - 2N, where w is the wage rate and N is the number of nurses employed (measured in hundreds of nurses). Nursing services are provided according to the supply schedule w = 14 + 2N.
a) How many nurses does National Hospital employ, and what wage will National pay its nurses?
b) What is the deadweight loss arising from monopsony?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.