Wag 100- 80 60 MRP 40- 20- 163.046 6.0 Labor Figure14.6 Therefre,the MRP=(10X(12-L).The firm'sprofit-maximizing quantity of labor occurs where MRP.w.If w =30.then 30 120.20L at the optimum.Solving for L vields 4.5 hours per dav.Similarly.if w=60 solving for Lyields3 hours per day. 7.The only legal employer of military soldiers in the United States is the federal governmen If the government uses its monopsonistic position,what criteri will it employ when figuring how many soldiers to recruit? What happens if a mandatory draft is implemented? Acting as a monopsonist in hiring soldiers.the federal government would hire soldiers until the marginal value of the last soldier is equal to his or her ony power. hired,and they are paid ess than n their When a mandatory draft is implemented,even fewer professional soldiers are hired.Wages for wolunteer soldiers fall,pushed down by the fact that wages ofthe draftees can be very low. 8.The demand for labor by an industry is given by the curve L=1200-10w, where L is the labor demanded per day and w is the wage rate.The supply curve a by L 20 What is the rate and quantity of labo What is the economie rent earned by workers? The equilibrium wage rate is determined where quantity of labor supplied is equal to the quantity of labor demanded: 20w=1,200.101,0rw=s40. Substituting into either the labor supply or labor demand equations,we find the equilibrium quantity oflabor is 800:Wage Labor 20 40 60 80 100 120 1.5 3.0 4.5 6.0 MRPL Figure 14.6 Therefore, the MRPL = (10)(12 - 2L). The firm’s profit-maximizing quantity of labor occurs where MRPL = w. If w = 30, then 30 = 120 - 20L at the optimum. Solving for L yields 4.5 hours per day. Similarly, if w = 60, solving for L yields 3 hours per day. 7. The only legal employer of military soldiers in the United States is the federal government. If the government uses its monopsonistic position, what criteria will it employ when figuring how many soldiers to recruit? What happens if a mandatory draft is implemented? Acting as a monopsonist in hiring soldiers, the federal government would hire soldiers until the marginal value of the last soldier is equal to his or her pay. There are two implications of the government’s monopsony power: fewer soldiers are hired, and they are paid less than their marginal product. When a mandatory draft is implemented, even fewer professional soldiers are hired. Wages for volunteer soldiers fall, pushed down by the fact that wages of the draftees can be very low. 8. The demand for labor by an industry is given by the curve L = 1200 - 10w, where L is the labor demanded per day and w is the wage rate. The supply curve is given by L = 20w. What is the equilibrium wage rate and quantity of labor hired? What is the economic rent earned by workers? The equilibrium wage rate is determined where quantity of labor supplied is equal to the quantity of labor demanded: 20w = 1,200 - 10w, or w = $40. Substituting into either the labor supply or labor demand equations, we find the equilibrium quantity of labor is 800: