Use the figure below to answer the following questions. Figure 17.3.1
-Refer to Figure 17.3.1.This figure shows the value of marginal product of labour curve,the labour supply curve,and the marginal cost of labour curve.If this labour market is controlled by a monopsony,then the monopsonist

Question

Use the figure below to answer the following questions.  Figure 17.3.1
-Refer to Figure 17.3.1.This figure shows the value of marginal product of labour curve,the labour supply curve,and the marginal cost of labour curve.If this labour market is controlled by a monopsony,then the monopsonist

Quizplus · Accepted Answer

In a monopsony, the employer has the power to set the wage rate. The marginal cost of labor curve for the monopsonist is higher than the supply curve, meaning that the cost of hiring an additional worker is higher than what the worker receives in wages. Therefore, to maximize profits, the monopsonist will hire fewer workers than a competitive labor market and pay a wage rate less than the value of marginal product of labor.

Use the Figure Below to Answer the Following Questions