L21

1
L21

• Noncompetitive
• Factor Markets

2
2 questions

• Impact of market power in goods market on labor
  market
• Market Power in labor market

3
SOH (Monopoly)

4
Labor Demand

5
Equilibrium

6
Equilibrium, General Elasticity

7
Monopoly and LM

• Increasing Labor by 1 gives less than MPL of
  revenue
• Monopoly demands less labor
• The reduction of employment depends on elasticity
• Monopoly and minimal wage rate?

8
Monopsony

• Market power on buyers side
• Most important monopsony Labor market
• Monopsony and minimal wage rate

9
Monopsony

10
SOH (Monopsony)

11
Monopsony Optimal Choice

12
Minimal Wage Rate

13
Minimal Wage rate Monopsony

• Increases Labor in equilibrium
• Increases wage in equilibrium
• Restores efficiency