Exhibit 28-11

-Refer to Exhibit 28-11.The firm in the exhibit is a monopsony.We have deliberately not identified the three curves in the exhibit.They are simply curves 1,2,and 3.If (union) collective bargaining with the monopsony guarantees the wage rate that workers will be paid is W₂,then how many more workers will the monopsony hire than it would hire if it could pay its chosen (or preferred) wage?

Question

Exhibit 28-11

-Refer to Exhibit 28-11.The firm in the exhibit is a monopsony.We have deliberately not identified the three curves in the exhibit.They are simply curves 1,2,and 3.If (union) collective bargaining with the monopsony guarantees the wage rate that workers will be paid is W₂,then how many more workers will the monopsony hire than it would hire if it could pay its chosen (or preferred) wage?

Quizplus · Accepted Answer

In a monopsony, the firm hires fewer workers at a lower wage. If collective bargaining sets a wage at W₂, the firm will hire more workers at this higher wage. The increase in the number of workers hired is the difference between Q₂ (the quantity of labor at the union wage) and Q₁ (the quantity of labor at the monopsony's preferred wage).

Exhibit 28-11 -Refer to Exhibit 28-11.The Firm in the Exhibit Is a the Exhibit