Warning: foreach() argument must be of type array|object, bool given in /var/www/html/web/app/themes/studypress-core-theme/template-parts/header/mobile-offcanvas.php on line 20

Question: The only legal employer of military soldiers in the United States is the federal government. If the government uses its knowledge of its monopsonistic position, what criteria will it employ when determining how many soldiers to recruit? What happens if a mandatory draft is implemented?

Short Answer

Expert verified

The federal government will hire soldiers till the marginal value of the last soldier is equal to the payment made to them. After the draft is implemented, wages for volunteer soldiers will fall.

Step by step solution

01

Explanation

The federal government in the United States behaves as a monopsonist; it will hire soldiers till the marginal value of the last soldier is equal to the payment made to the last soldier. The monopsony power of the government will lead to hiring fewer soldiers and paying less to the soldier.

After the mandatory draft is implemented, the soldier with less expertise will be employed, and the volunteer soldiers will be paid less, as the wages of the draftees can be low enough. Hence, the number of soldiers hired will increase than the volunteer system.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Question: Suppose that the wage rate is \(16 per hour and the price of the product is \)2. Values for output and labor are in units per hour.

q

l

0

0

20

1

35

2

47

3

57

4

65

5

70

6

  1. Find the profit-maximizing quantity of labor.

  2. Suppose that the price of the product remains at \(2 but that the wage rate increases to \)21. Find the new profit-maximizing level of L.

  3. Suppose that the price of the product increases to \(3 and the wage remains at \)16 per hour. Find the new profit-maximizing L.

  4. Suppose that the price of the product remains at \(2 and the wage at \)16, but that there is a technological breakthrough that increases output by 25 percent for any given level of labor. Find the new profit-maximizing L.

Using the same information as in Exercise 8, suppose now that the only labor available is controlled by a monopolistic labor union that wishes to maximize the rent earned by union members. What will be the quantity of labor employed and the wage rate? How does your answer compare with your answer to Exercise 8? Discuss. (Hint: The unionโ€™s marginal revenue curve is given by MR = 120 - 0.2L.)

A firm uses a single input, labor, to produce output q according to the production function q = 8โˆšL. The commodity sells for \(150 per unit and the wage rate is \)75 per hour.

  1. Find the profit-maximizing quantity of L.
  2. Find the profit-maximizing quantity of q.
  3. What is the maximum profit?
  4. Suppose now that the firm is taxed \(30 per unit of output and that the wage rate is subsidized at a rate of \)15 per hour. Assume that the firm is a price taker, so the price of the product remains at $150. Find the new profit-maximizing levels of L, q, and profit.
  5. Now suppose that the firm is required to pay a20-percent tax on its profits. Find the new profit-maximizing levels of L, q, and profit.

You are offered the choice of two payment streams: (a) \(150 paid one year from now and \)150 paid two years from now; (b) \(130 paid one year from now and \)160 paid two years from now. Which payment stream would you prefer if the interest rate is 5 percent? If it is 15 percent?

The only legal employer of military soldiers in the United States is the federal government. If the government uses its knowledge of its monopsonistic position, what criteria will it employ when determining how many soldiers to recruit? What happens if a mandatory draft is implemented?

See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free