Compared to a monopsonist that sells its output in a competitive product market,an otherwise identical monopsonist with monopoly power in the product market will pay:
A)a lower wage
B)a higher wage
C)the same wage
D)more information is needed

Question

Quizplus · Accepted Answer

Monopoly power in the product market gives the monopsonist the ability to pay lower wages than in a competitive product market. This is because workers have fewer alternative employment options, and the monopsonist can exercise market power to keep wages artificially low. With the added advantage of being the only buyer in the product market, the monopsonist has even greater ability to suppress wages, leading to a lower wage rate.

Compared to a Monopsonist That Sells Its Output in a Competitive