Problem 11
Suppose there are two groups of workers in the economy, male workers and female workers. Workers in both groups are equally productive and are in equal number. Suppose a monopsony has a prejudice towards female workers. Show on a graph the effect of this discrimination on the wages the two groups receive in the monopsony.
Problem 12
A firm is producing chocolate bars using only labour. The production function is \(Q=20 L-0.5 L^{2}\), where \(L\) denotes labour. The firm is selling its chocolate bars in a competitive market and the price of a chocolate bar is \(£ 1\). The firm hires workers in a competitive market. The wage paid to a worker is \(w\). Write down the profit function of the firm and find the labour demand function \((L\) as a function of \(w\) ) of the firm.
Problem 13
Essay question In the past 50 years, there has been a dramatic increase in female, participation in the labour force. Three possible explanations are: (a) a change in social attitudes toward women working, (b) technological advances that make it easier to accomplish household chores (shopping, cleaning, and so on) without women themselves having to remain at home full time, and (c) the possibility that material goods are a luxury and that people wish to buy disproportionately more of them as living standards rise. What evidence would you gather in order to test these different hypotheses?
Problem 14
Suppose a monopsonist faces the production function \(Q=20 L-0.5 L^{2}\) and a labour supply \(L^{S}=w-5\). This means that the wage that the monopsony must pay is \(w=L+5\). Assume that the price of the product is \(£ 1\). Find the labour demand that maximizes the profits of the monopsony. What about the wage?
