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Questions › DSE › DSE 2009 › Q44
2 marksMicroeconomics › Factor markets and income distribution › Labour market equilibrium, minimum wages and monopsonyHardabout 4 min

DSE 2009 Question 44: Factor markets and income distribution

'Suraksha' is the sole producer and supplier of security systems and the sole employer of locksmiths. Demand for security systems is D(p)=100−pD(p)=100-pD(p)=100−p. Production requires only locksmiths, with production function f(L)=4Lf(L)=4Lf(L)=4L. The locksmith supply curve is L(w)=max⁡(0, w2−20)L(w)=\max\left(0,\ \tfrac{w}{2}-20\right)L(w)=max(0, 2w​−20), where www is the wage. How many locksmiths will Suraksha employ?

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'Suraksha' is the sole producer and supplier of security systems and the sole employer of locksmiths. Demand for security systems is D(p)=100-p. Production requires only locksmiths, with production function f(L)=4L. The locksmith supply curve is L(w)=max (0, w/2-20), where w is the wage. How many locksmiths will Suraksha employ? (A) 5 (B) 10 (C) 15 (D) 20

Factor markets and income distribution has come up 55 times in 6 exams since 2006.

What this question tests

This question is on Labour market equilibrium, minimum wages and monopsony, part of Factor markets and income distribution in Microeconomics.

Wages and employment in competitive and single-buyer labour markets.

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Question from the DSE 2009 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.