Use the figure shown to answer the following. Berk owns all of the farms in his area and is subsequently the only employer of farm workers in the area. As a monopsonist, Berk faces the market conditions represented in the graph above, where the curve labeled D=MRP is the Berk's demand curve, the curve labeled S=AE is the available supply of labor and the curve labeled ME is the Berk's marginal expenditure on labor.
a. On the diagram label the wage and employment level that will maximize Berk's profit, Wm and Lm. What is the wage rate and level of employment?
b. On the diagram label the wage and employment level that would maximize Berk's profit if the firm was perfectly competitive firm's profit, Wpc and Lpc. What is the wage rate and level of employment?