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A Firm Uses One Variable Factor, Labour, Which It Buys

Question 95

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A firm uses one variable factor, labour, which it buys as a monopsonist, to produce a single output. It sells the product in a perfectly competitive market. The firm's production function is: Y = - 7L2 + 200L where Y is daily output in units and L is the number of workers employed. The output is sold at $.5 (50 cents)per unit. The supply of labour to the firm is: w(L)=28 + L
i)What is the number of workers employed ? What is the wage per worker?
ii)Calculate the deadweight loss;

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i)Because the firm acts as a competitor ...

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