Bridge Coal Company is the only employer in a remote and mountainous region of the country, so the firm is the monopsony buyer of labor in the market. If the price of coal increases, then the firm's quantity of labor demanded ________ and the equilibrium wage ________.

Question

Quizplus · Accepted Answer

When the price of coal increases, the Bridge Coal Company, being the sole buyer of labor in a monopsony market, will demand more labor to increase production and capitalize on the higher coal prices. This increased demand for labor will push up the equilibrium wage as the company is willing to pay more to attract the necessary workers.

Bridge Coal Company Is the Only Employer in a Remote