-(Exhibit: Minimum Wage and Monopsony) In the absence of a minimum wage, the monopsony firm in the exhibit would maximize profits by hiring _______ units of labor per period.

Question

Quizplus · Accepted Answer

In a monopsony, the firm maximizes profits by hiring where marginal cost of labor equals marginal revenue product. This typically occurs at a lower quantity of labor than in a competitive market, which is represented by L₁ in the exhibit.

-(Exhibit: Minimum Wage and Monopsony) in the Absence of a Minimum