A monopsonist must pay a higher net wage rate to hire additional workers because as a single
A)Seller,it has market power.
B)Seller,it does not have to compete with other firms for customers.
C)Buyer in the market,it faces an upward-sloping supply curve for labor.
D)Buyer in the market,it faces a flat supply curve for labor.

Question

Quizplus · Accepted Answer

A monopsonist is a single buyer in the market for a specific type of labor. The supply of labor available to the monopsonist is upward sloping, meaning that the higher the wage rate offered by the monopsonist, the more workers will be willing to supply their labor. Therefore, to hire additional workers, the monopsonist must offer a higher net wage rate (wage rate minus any costs or taxes imposed on workers) to entice workers to supply their labor. This is different from a monopoly, where the firm is a single seller and has market power to set higher prices due to a lack of competition.

A Monopsonist Must Pay a Higher Net Wage Rate to Hire