A monopsonist must pay a higher net wage rate to hire additional workers because as a single

Question

Quizplus · Accepted Answer

A monopsonist is a single buyer in a market, and as such, it faces an upward-sloping supply curve for labor. This means that in order to hire additional workers, it must increase the wage rate it offers to each worker, as increasing the number of workers it hires will lead to higher wages for all workers due to the limited supply of labor. In contrast, choices A and B describe the characteristics of a monopolist, which is a single seller in a market, and are not relevant to the behavior of a monopsonist.

A Monopsonist Must Pay a Higher Net Wage Rate to Hire