Exhibit 28-3

-Refer to Exhibit 28-3.Consider the monopsony setting.In the absence of collective bargaining,what wage rate does the profit-maximizing monopsonist pay?

Question

Exhibit 28-3
 
-Refer to Exhibit 28-3.Consider the monopsony setting.In the absence of collective bargaining,what wage rate does the profit-maximizing monopsonist pay?

Quizplus · Accepted Answer

In a monopsony, the profit-maximizing wage rate is where the marginal cost of labor equals the marginal revenue product of labor, which is typically lower than the competitive equilibrium wage. This is usually represented by W₁ in such diagrams.

Exhibit 28-3 -Refer to Exhibit 28-3.Consider the Monopsony Setting.In the Absence of Setting.In