Asked by Maryann Fitzgerald on May 02, 2024
Verified
A monopsonistic employer in an unorganized (nonunion) labor market will:
A) pay a wage rate less than labor's MRP.
B) pay the same wage rate but hire fewer workers than if the market was purely competitive.
C) hire the number of workers indicated by the intersection of the MRC and the labor supply curves.
D) pay a wage rate in excess of labor's MRP.
Monopsonistic Employer
An employer who has significant control over the labor market and is the only or dominant buyer of labor, allowing them to influence wages and employment conditions.
MRP
The marginal revenue product, representing the additional revenue generated from employing one more unit of a factor, such as labor or capital.
- Delve into the significance of monopsony for wages and the number of positions available.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
A
Explanation :
In a monopsony, the employer has market power to influence the wage rate. Without a union or any other organizing force to counteract this, the employer will pay a wage rate less than labor's MRP, as they can hire fewer workers at a lower wage rate.
Learning Objectives
- Delve into the significance of monopsony for wages and the number of positions available.