In a monopsonistic market, there appears to be a labor

1.) In a monopsonistic market, there appears to be a labor shortage. Assume as a result, newpeople enter the market seeking employment. Compare the old and the new equilibrium.Particularly, what happens to E* and w*? Are the new migrant workers who do not get a jobunemployed or simply out of the labor force?2.) Provide a brief rationale for (i) why firms may offer a wage that is related to the actualproductivity of a worker and (ii) why workers might prefer a wage that is directly related totheir performance rather than pre-determined.3.) Explain why wages should converge across regions if it is costless for workers and firms torelocate from one region to another? Will wages still converge if only workers can movecostlessly, but firms are not mobile?

 

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