平狄克微觀經(jīng)濟(jì)學(xué)第六版第十四章課后答案

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CHAPTER14

MARKETSFORFACTORINPUTS

TEACHINGNOTES

Thefollowingtwochaptersexaminethemarketsforlaborandcapital.Althoughthediscussioninthischapterisgeneral,mostoftheexamplesrefertolaborastheonlyvariableinputtoproduction,withtheexceptionofExample14.1,whichdiscusses"TheDemandforJetFuel"byairlines.Labordemandandsupplyarediscussedinthefirstsection,andthecompetitivefactormarketequilibriumandeconomicrentarediscussedinthesecondsection.Section14.3exploresthefactormarketstructureforthecasewherethebuyerhasmonopsonypower,andsection14.4exploresthecaseofmonopolypoweronthepartofthesellerofthefactor.

AnunderstandingofthischapterreliesonconceptsfromChapters4through8and10.IfyouhavejustcoveredChapters11-13,youmightbeginbyreviewingmarginalproduct,marginalrevenue,andcostminimization.Youshouldthendiscussmarginalrevenueproductandtheprofit-maximizingconditionMRPL=w.ExplainwhyweareonlyinterestedintheportionoftheMPcurvebelowtheaverageproductcurve<thedownward-slopingportion>.Thederivationofthefirm’sdemandcurveforlaborisstraightforwardwhenlaboristheonlyfactor,butbecomesmorecomplicatedwhenthereareseveralvariableinputs.Inparticular,youmightexplainwhytheMRPLcurveshiftsasthefirmsubstitutesoneinputforanotherinproductioninresponsetoapricechangebynotingthattheMRPLcurveisdrawnforafixedleveloftheothervariableinput.

Whenpresentingthemarketlabordemandcurve,explainthatsincetheinputpriceschangeasmoreinputsaredemanded,themarketdemandcurveisnotsimplythesummationofindividualdemandcurves.Youcanextendthepresentationofpriceelasticityofinputdemand<seeExample14.1>bydiscussingtheconditionsleadingtopricesensitivity.Elasticityisgreater<1>whentheelasticityofdemandfortheproductishigher,<2>whenitiseasytosubstituteoneinputforanother,and<3>whentheelasticityofsupplyishigherforotherinputs.Elasticityofsupply,whichwasdiscussedinChapter2,isreintroducedinExample14.2.Youshouldalsodistinguishbetweenshort-runandlong-runelasticity<seeFigure14.6>.

Ifyouhavealreadycoveredsubstitutionandincomeeffects,thestudentswillbereadyforthederivationofthebackward-bendingsupplycurveforlabor.AlthoughFigure14.9isastraightforwardapplicationofthesetools,studentsareoftenconfusedbytheplottingofincomeagainstleisure.Pointoutthatthisisjustanothertypeofutilitymaximizationproblemwherethetwogoodsareleisureandincome.Incomecanbethoughtofastheconsumptionofgoodsotherthanleisure,inthatmoreincomebuysmoregoods.Youcanalsoimplicitlyassumethatthepriceofothergoodsis$1andthepriceofleisureisthewage.Thesupplyoflaborcurveisderivedbychangingthewageandfindingthenewlevelofhoursworked.Anindividual’ssupplycurveoflaborisbackwardbendingonlywhentheincomeeffectdominatesthesubstitutioneffectandleisureisanormalgood.ShowtypicalsupplycurvesforeachgroupinTable14.2.Foranexperimentalstudyofthelabor-leisuretrade-offseeBattalio,Green,andKagel,"Income-LeisureTradeoffofAnimalWorkers,"AmericanEconomicReview<September1981>.

Section14.2bringstogetherlabordemandandsupplyforbothcompetitiveandmonopolisticproductmarkets.AlthougheconomicrentwaspresentedinChapter8,itisreintroducedwithmoredetailhere.InSection14.3,carefullyexplainwhythemarginalexpenditurecurveisabovetheaverageexpenditurecurveforamonopsonist<seeFigure14.14>.Youcandiscusshowamonopsonistwouldpricediscriminate,e.g.,payadifferentwageratetoeachemployee.Withperfectpricediscrimination,themarginalrevenueexpenditurecurvewouldcoincidewiththeaverageexpenditurecurve.Althoughmonopsonyexistsinsomemarkets,theexerciseofmonopsonypowerisrarebecauseoffactormobility.However,theemploymentofathletesbytheownersofprofessionalteamsprovidesagoodexample<seeExample14.4"MonopsonyPowerintheMarketforBaseballPlayers">.Onthissametopic,seeSommersandQuinton,"PayandPerformanceinMajorLeagueBaseball:TheCaseoftheFirstFamilyofFreeAgents,"JournalofHumanResources<Summer1982>.Section14.4discussesthecaseofunionstoexploremonopolypoweronthepartoftheselleroftheinput.

REVIEWQUESTIONS

1.Whyisafirm’sdemandforlaborcurvemoreinelasticwhenthefirmhasmonopolypowerintheoutputmarketthanwhenthefirmisproducingcompetitively?

Thefirm’sdemandcurveforlaborisdeterminedbytheincrementalrevenuefromhiringanadditionalunitoflaborknownasthemarginalrevenueproductoflabor:MRPL=<MPL><MR>,theadditionaloutput<"product">thatthelastworkerproduced,timestheadditionalrevenueearnedbysellingthatoutput.Inacompetitiveindustry,themarginalrevenuecurveisperfectlyelasticandequaltoprice.Foramonopolist,marginalrevenueisdownwardsloping.Asmorelaborishiredandmoreoutputisproduced,themonopolistwillchargealowerpriceandmarginalrevenuewilldiminish.Allelsethesame,marginalrevenueproductwillbesmallerforthemonopolist.Thisimpliesthatthemarginalrevenueproductforthemonopolistismoreinelasticthanforthecompetitivefirm.

2.Whymightalaborsupplycurvebebackwardbending?

Abackward-bendingsupplycurveforlabormayoccurwhentheincomeeffectofanincreaseinthewageratedominatesthesubstitutioneffect.Laborsupplydecisionsaremadebyindividualschoosingthemostsatisfyingcombinationofworkandother<leisure>activities.Withalargerincome,theindividualcanaffordtoworkfewerhours:theincomeeffect.Asthewagerateincreases,thevalueofleisuretime<theopportunitycostofleisure>increases,thusinducingtheindividualtoworklongerhours:thesubstitutioneffect.Becausethetwoeffectsworkinoppositedirections,theshapeofanindividual’slaborsupplycurvedependsontheindividual’spreferencesforincome,consumption,andleisure.

3.Howisacomputercompany’sdemandforcomputerprogrammersaderiveddemand?

Acomputercompany’sdemandforinputs,includingprogrammers,dependsonhowmanycomputersitsells.Thefirm’sdemandforprogramminglabordependson<isderivedfrom>thedemanditfacesinitsmarketforcomputers.Asdemandforcomputersshifts,thedemandforprogrammersshifts.

4.Comparethehiringchoicesofamonopsonisticandacompetitiveemployerofworkers.Whichwillhiremoreworkers,andwhichwillpaythehigherwages?Explain.

Sincethedecisiontohireanotherworkermeansthemonopsonistmustpayahigherwageforallworkers,andnotjustthelastworkerhired,itsmarginalexpenditurecurveliesabovetheinputsupplycurve<theaverageexpenditurecurve>.Themonopsonist’sprofit-maximizinginputdemand,wherethemarginalexpenditurecurveintersectsthemarginalrevenueproductcurve,willbelessthanthecompetitor’sprofit-maximizinginputchoice,wheretheaverageexpenditurecurveintersectsthedemandcurve.Themonopsonisthireslesslabor,andthewagepaidwillbelessthaninacompetitivemarket.

5.Rockmusicianssometimesearnover$1millionperyear.Canyouexplainsuchlargeincomesintermsofeconomicrent?

Economicrentisthedifferencebetweentheactualpaymenttothefactorofproductionandtheminimumamountthatthefactoriswillingtoaccept.Inthiscase,youmightassumethattherearealimitednumberoftop-qualityrockmusicianswhowillcontinuetoplayrockmusicnomatterwhattheyarepaid.Thisresultsinaperfectlyinelasticsupplycurve,orsomethingclosetoit.Giventhehighdemandforrockmusic,thewagewillbeveryhighandtherewillbealotofeconomicrent.Iftherewasalargersupplyoftop-qualityrockmusicians,oramoreelasticsupply,thentheeconomicrentwouldbesmaller.

6.Whathappenstothedemandforoneinputwhentheuseofacomplementaryinputincreases?

Ifthedemandforthecomplementaryinputincreases,thedemandforthegiveninputwillincreaseaswell.Whendemandforthecomplementaryinputincreases,thereisanincreaseinthequantityhiredandpossiblythepricepaid.BothofthesechangeswillincreasetheMRPofthegiveninput,andhencewillincreasethequantityhiredandpossiblythepricepaid.Whetherthepricesoftheinputsincreasesdependsonthedegreeofmonopsonypoweronthepartofthefirm.

7.Foramonopsonist,whatistherelationshipbetweenthesupplyofaninputandthemarginalexpenditureonit?

Thedecisiontoincreaseemploymentmeansthemonopsonistmustpayallunitsthehigherprice,andnotjustthelastunithired.Therefore,itsmarginalexpenditurecurveliesabovetheinputsupplycurve<theaverageexpenditurecurve>.Hiringmorelaborwillincreasethemarginalexpenditure,whichwillincreasetheaverageexpenditure.Iftheaverageexpenditureisincreasing,thenthemarginalexpendituremustbegreaterthantheaverageexpenditure.

8.CurrentlytheNationalFootballLeaguehasasystemfordraftingcollegeplayersbywhicheachplayerispickedbyonlyoneteam.Theplayermustsignwiththatteamornotplayintheleague.Whatwouldhappentothewagesofnewlydraftedandmoreexperiencedfootballplayersifthedraftsystemwererepealed,andallteamscouldcompeteforcollegeplayers?

TheNationalFootballLeaguedraftandreserveclause<aprimaryissueinthe1987-1988season’sstrike>createsamonopsonistcartelamongtheownersofNFLteams.Ifthedraftsystemwererepealed,competitionamongteamswouldincreasewagesoffootballplayerstothepointwherethemarginalrevenueproductofeachplayerwouldbeequaltotheplayer’swage.

9.Thegovernmentwantstoencourageindividualsonwelfaretobecomeemployed.Itisconsideringtwopossibleincentiveprogramsforfirms.

A.Givethefirm$2perhourforeveryindividualonwelfarewhoishired.

B.Giveeachfirmthathiresoneormorewelfareworkersapaymentof$1000peryear,irrespectiveofthenumberofhires.

Towhatextentiseachoftheseprogramslikelytobeeffectiveatincreasingtheemploymentopportunitiesforwelfareworkers?

Firmswillhireadditionallaboraslongastheextrabenefitisgreaterthantheextracostofhiringtheworker,oruntilMRPL=w.OptionAwouldbeeffectivebecauseifthefirmreceives$2perhourforeverywelfareworkerhiredthentheeffectivewagepaid,w,willfallandthefirmwillfinditoptimaltohiremorelaboruntilthebenefits<MRPL>againequalthecosts<w>atthemargin.OptionBwouldbeeffectiveatincreasingemploymentopportunitiesalsointhatifthefirmhiresanindividualwhohasbeenonwelfaretheywillthenreceive$1000.However,planBisnotnecessarilyaseffectiveasplanAgiventhefirmonlyreceivesonelumpsumpaymentregardlessofthenumberofwelfareworkershired.Inthiscasethefirmonlyhasanincentivetohiretheonewelfareworker,thoughtheymayofcoursechoosetohiremorethanonewelfareworker.

10.Asmallspecialtycookiecompany,whoseonlyvariableinputislabor,findsthattheaverageworkercanproduce50cookiesperday,thecostoftheaverageworkeris$64perday,andthepriceofacookieis$1.Isthecookiecompanymaximizingitsprofit?Explain.

Themarginalproductoflaboris50<cookiesperday>andthepricepercookieis1<$percookie>sothemarginalrevenueproductis$50/day.Sincethisislessthanthewageof$64perdaythecookiecompanyisnotmaximizingprofit.Theyareemployingtoomuchlaborsincethecostoflaborisgreaterthanthebenefitoflaboratthemargin,andarethereforeproducingtoomanycookies.

11.Afirmusesbothlaborandmachinesinproduction.Explainwhyanincreaseintheaveragewageratecausesbothamovementalongthelabordemandcurveandashiftofthecurve.

Anincreaseinthewageratecausesanupwardmovementalongthelabordemandcurve.Foranygivenmarginalrevenueproductcurve,thefirmwillfindthattheywanttohirefewerworkerswhenthewageincreases<anupwardmovement>.However,whenthewageincreasesthemarginalcostwillincreasewhichwillreducedesiredoutput.Whenoutputfalls,thefirmwillnotneedasmanymachinesandthemarginalproductoflaborcurvewillshifttotheleft,assumingmachinesandlaborarecomplementary.Thiswillalsoreducethedemandforlabor.

EXERCISES

1.Supposethatthewagerateis$16perhour,andthepriceoftheproductis$2.Valuesforoutputandlaborareinunitsperhour.

q L

0 0

20 1

35 2

47 3

57 4

65 5

70 6

Findtheprofit-maximizingquantityoflabor.

Fromtheinformationgivenabove,calculatethemarginalproductoflabor,theextraoutputproducedbyhiringonemoreunitoflabor,andthenmultiplybypricetogetthemarginalrevenueproductoflabor.Tofindtheprofit-maximizingquantityoflabor,usetherulethatthefirmwantstohirelaboronlyaslongasthemarginalrevenueproductoflaborisgreaterthanthenominalwage,oruptothepointwherethemarginalrevenueproductoflaborisequaltothenominalwage.Fromthetablebelow,thefirmwillhire5unitsoflabor.

q

L

MPL

MRPL

0

0

-

-

20

1

20

40

35

2

15

30

47

3

12

24

57

4

10

20

65

5

8

16

70

6

5

10

Supposethatthepriceoftheproductremainsat$2butthatthewagerateincreasesto$21.Findthenewprofit-maximizingquantityoflabor.

Theabovetabledoesnotchangeforthispartoftheproblem.However,thefirmnolongerwantstohire5unitsoflaborbecausethebenefitofthe5thunit<$16perhour>islessthanthecostofthe5thunit<$21perhour>.Thefirmwouldonlyhire3unitsoflaborperhoursinceinthiscasethebenefitstillexceedsthecostatthemargin.Thefirmwouldstickwith3unitsinsteadof4unlessfractionalunitsarepossible.AtL=4thecostisgreaterthanthebenefitsoyouloseprofitbyhiringthe4thunitoflabor.

Supposethepriceoftheproductincreasesto$3andthewageremainsat$16perhour.Findthenewprofit-maximizingquantityoflabor.

Achangeinthepriceoftheproductwillnotchangethemarginalproductoflabor,butitwillchangethemarginalrevenueproductoflabor.Thenewmarginalrevenueproductoflaborisgiveninthetablebelow.Thefirmwillstillwanttohire5unitsoflabor,asinpartaabove.Itwillnothirethe6thunitbecausetheextrabenefitislessthantheextracost.Profitwillbegreaterthaninparta.

q

L

MPL

MRPL

0

0

-

-

20

1

20

60

35

2

15

45

47

3

12

36

57

4

10

30

65

5

8

24

70

6

5

15

Supposethatthepriceoftheproductremainsat$2andthewageremainsat$16,butthereisatechnologicalbreakthroughthatincreasesoutputby25%foranygivenleveloflabor.Findthenewprofit-maximizingquantityoflabor.

Thetechnologicalbreakthroughchangesthenumberofunitsofoutputproducedbyagivennumberofunitsoflabor,andhencechangesthemarginalproductandthemarginalrevenueproductoflabor.Thenewoutputvaluesarefoundbymultiplyingtheoldvaluesby1.25.Thisnewinformationisgiveninthetablebelow.Thefirmwillstillchoosetohire5unitsoflabor.Profitwillbegreaterthaninparta.

q

L

MPL

MRPL

0

0

-

-

25

1

25

50

43.75

2

18.75

37.5

58.75

3

15

30

71.25

4

12.5

25

81.25

5

10

20

87.5

6

6.25

12.5

2.Assumethatworkerswhoseincomesarelessthan$10,000currentlypaynofederalincometaxes.Supposeanewgovernmentprogramguaranteeseachworker$5,000,whetherornotheorsheearnsanyincome.Forallearnedincomeupto$10,000,theworkermustpaya50-percenttax.Drawthebudgetlinefacingtheworkersunderthisnewprogram.Howistheprogramlikelytoaffectthelaborsupplycurveofworkers?

Thebudgetlineforworkersunderthisprogramisastraightlineat$5,000.Thislineisshowninthefigureandtablebelow.Workersearn$5,000whethertheyworkornot.Ifworkersworkonlytoearnincome,i.e.,therearenootherbenefitssuchas"gettingoutofthehouse"or"gainingexperience,"thereisnoincentivetoworkunderthenewprogram.Onlywagesyieldingincomesgreaterthan$10,000willresultinapositivelaborsupply.

Figure14.2

Income

AfterTax

Income

Government

Subsidy

Total

Income

0

0

5,000

$5,000

$1,000

500

4,500

5,000

2,000

1,000

4,000

5,000

3,000

1,500

3,500

5,000

4,000

2,000

3,000

5,000

5,000

2,500

2,500

5,000

6,000

3,000

2,000

5,000

7,000

3,500

1,500

5,000

8,000

4,000

1,000

5,000

9,000

4,500

500

5,000

10,000

5,000

0

5,000

3.Usingyourknowledgeofmarginalrevenueproduct,explainthefollowing:

a. Afamoustennisstarispaid$100,000forappearingina30-secondtelevisioncommercial.Theactorwhoplayshisdoublespartnerispaid$500.

Marginalrevenueproductoflabor,MRPL,isequaltomarginalrevenuefromanincrementalunitofoutputmultipliedbythemarginalproductfromanincrementalunitoflabor,orinotherwords,theextrarevenuegeneratedbyhavingthetennisstarappearinthead.Thefamoustennisstarisabletohelpincreaserevenuesfarmorethantheactor,soheispaidmuchmorethantheactor.Thewageoftheactorisdeterminedbythesupplyanddemandofactorswillingtoplaytenniswithtennisstars.

b. Thepresidentofanailingsavingsandloanispaidnottostayinhisjobforthelasttwoyearsofhiscontract.

Themarginalrevenueproductofthepresidentoftheailingsavingsandloanislikelytobenegativeandtherefore,thesavingsandloanisbetteroffbypayingthepresidentnottoshowup.Theyhavecalculatedthattheywillloseless<orgainmore>bypayingthepresidentoffandhiringsomeoneelse.

c. Ajumbojetcarrying400passengersispricedhigherthana250-passengermodeleventhoughbothaircraftcostthesametomanufacture.

Theabilityofthelargerjettogeneratemorerevenueincreasesitsvaluetotheairline,andthereforetheairlineiswillingtopaymoreforit.

4.Thedemandsforthefactorsofproductionlistedbelowhaveincreased.Whatcanyouconcludeaboutchangesinthedemandfortherelatedconsumergoods?Ifdemandsfortheconsumergoodsremainunchanged,whatotherexplanationisthereforanincreaseinderiveddemandsfortheseitems?

a. computermemorychips

Ingeneral,anincreaseinthedemandforagoodincreasesthedemandforitsfactorinputs.Theconverseisnotnecessarilytrue;i.e.,anincreaseinthedemandforfactorinputsdoesnotnecessarilyimplyanincreaseinthedemandforthefinalproduct.Thedemandforaninputmayincreaseduetoachangeintheuseofotherinputsintheproductionprocess.Asthepriceofanotherinputincreases,itsdemandfallsandthedemandofsubstitutableinputsrises.Inthiscase,theincreaseinthedemandforcomputermemorychipsmusthavebeencausedbyanincreaseinthedemandforpersonalcomputersgiventhatcomputermemorychipsareusedonlyincomputers,andtherearenosubstitutesforcomputermemorychips.

b. jetfuelforpassengerplanes

Withanincreaseinthedemandforjettravel,thedemandforjetfuelwillincrease.Therearenosubstitutesforjetfuel.

c. paperusedfornewsprint

Giventhepaperisbeingusedtoprintnewspapersthentheremusthavebeenanincreaseinthecirculationofnewspapers.

d. aluminumusedforbeveragecans

Withanincreaseindemandforcolddrinksinthesummer,theseasonaldemandforaluminumincreases,sothisisonepossibleexplanation.Alternatively,ifglassorplastichavebecomemoreexpensivethenthismayaffectthedemandforaluminum.Finally,changesinthemarketforrecycledaluminummayaffectthedemandfornewaluminum.

5.Supposetherearetwogroupsofworkers,unionizedandnonunionized.Congresspassesalawthatrequiresallworkerstojointheunion.Whatdoyouexpecttohappentothewageratesofformerlynonunionizedworkers?ofthoseworkerswhowereoriginallyunionized?Whathaveyouassumedabouttheunion’sbehavior?

Ingeneral,weexpectthatnonunionizedworkersareearninglowerwagesthanunionizedworkers.Ifallworkersareforcedtojointheunion,itwouldbereasonabletoexpectthatthenonunionizedworkerswillnowreceivehigherwagesandtheunionizedworkerswillreceiveawagethatcouldgoeitherway.Thereareacoupleofitemstoconsider.First,theunionnowhasmoremonopolypowerinthattherearenononunionworkerstoactassubstitutesforunionworkers.Thisgivesmorepowertotheunion,whichmeanshigherwagescaningeneralbenegotiated.However,theunionnowhasmorememberstosatisfy.Ifwagesarekeptatahighlevel,therewillbefewerjobs,andhencesomepreviouslynonunionizedworkersmayendupwithnojob.Theunionmaywishtotradeoffsomeofthewageforaguaranteeofmorejobs.Theaverageincomeofallworkerswillriseiflabordemandisinelasticandwillfalliflabordemandiselastic.

6.Supposeafirm’sproductionfunctionisgivenbyQ=12L-L2,forL=0to6,whereLislaborinputperdayandQisoutputperday.Deriveanddrawthefirm’sdemandforlaborcurveifthefirm’soutputsellsfor$10inacompetitivemarket.Howmanyworkerswillthefirmhirewhenthewagerateis$30perday?$60perday?<Hint:Themarginalproductoflaboris12-2L.>

Thedemandforlaborisgivenbythemarginalrevenueproductoflabor.Thisisequaltotheproductofmarginalrevenueandthemarginalproductoflabor:MRPL=<MR><MPL>.Inacompetitivemarket,priceisequaltomarginalrevenue,soMR=10.WearegivenMPL=12-2L<theslopeoftheproductionfunction>.

Figure14.6

Therefore,theMRPL=<10><12-2L>.Thefirm’sprofit-maximizingquantityoflaboroccurswhereMRPL=w.Ifw=30,then30=120-20Lattheoptimum.SolvingforLyields4.5hoursperday.Similarly,ifw=60,solvingforLyields3hoursperday.

7.TheonlylegalemployerofmilitarysoldiersintheUnitedStatesisthefederalgovernment.Ifthegovernmentusesitsmonopsonisticposition,whatcriteriawillitemploywhenfiguringhowmanysoldierstorecruit?Whathappensifamandatorydraftisimplemented?

Actingasamonopsonistinhiringsoldiers,thefederalgovernmentwouldhiresoldiersuntilthemarginalvalueofthelastsoldierisequaltohisorherpay.Therearetwoimplicationsofthegovernment’smonopsonypower:fewersoldiersarehired,andtheyarepaidlessthantheirmarginalproduct.Whenamandatorydraftisimplemented,evenfewerprofessionalsoldiersarehired.Wagesforvolunteersoldiersfall,pusheddownbythefactthatwagesofthedrafteescanbeverylow.

8.ThedemandforlaborbyanindustryisgivenbythecurveL=1200-10w,whereListhelabordemandedperdayandwisthewagerate.ThesupplycurveisgivenbyL=20w.Whatistheequilibriumwagerateandquantityoflaborhired?Whatistheeconomicrentearnedbyworkers?

Theequilibriumwagerateisdeterminedwherequantityoflaborsuppliedisequaltothequantityoflabordemanded:

20w=1,200-10w,orw=$40.

Substitutingintoeitherthelaborsupplyorlabordemandequations,wefindtheequilibriumquantityoflaboris800:

LS=<20><40>=800,

and

LD=1,200-<10><40>=800.

Economicrentisthesummationofthedifferencebetweentheequilibriumwageandthewagegivenbythelaborsupplycurve.Here,itistheareaabovethelaborsupplycurveuptoL=800andbelowtheequilibriumwage.Thistriangle’sareais<0.5><800><$40>=$16,000.

9.ThisexerciseisacontinuationofExercise8.Supposenowthattheonlylaboravailableiscontrolledbyamonopolisticlaborunionthatwishestomaximizetherentearnedbyunionmembers.Whatwillbethequantityoflaboremployedandthewagerate?Howdoesyouranswercomparewithyouranswertoexercise8?Discuss.<Hint:Theunion’smarginalrevenuecurveisgivenbyL=1200-20w.>

Recallthatthemonopolistchoosesoutputbysettingmarginalrevenueequaltothemarginalcostofsupplyingonemoreunitofoutput,asopposedtothecompetitivefirmwhichchoosesoutputbysettingpriceequaltomarginalcost,orinotherwordsproducingwheresupplyintersectsdemand.Themonopolisticlaborunionactsinthesameway.Tomaximizerentinthiscase,theunionwillchoosethenumberofworkershiredsothatthemarginalrevenuetotheunion<theadditionalwagesearned>isequaltotheextracostofinducingtheworkertowork.Thisinvolveschoosingthequa