150 14 —
200 16 —
250 18 —
300 20 —
350 22 —
a. On a diagram, draw the supply of labour curve and the
demand for labour curve. (Remember that MRP is
computed in between the rows in the table.)
b. What is the equilibrium wage and level of employment if
the labour market is competitive? (Your graph will need
to be carefully plotted in order for you to determine these
values as precisely as possible.)
c. Now suppose there is only a single buyer for labour—a
monopsonist. Compute the marginal cost of labour for
each level of employment and fill in the table. (Recall that
the MC of labour is the change in labour cost divided by
the change in employment. The first two rows have been
completed for you.)
d. What wage and level of employment would the
monopsonist choose? Explain.