FIGURE 14- 5
-Refer to Figure 14- 5. If this labour market is monopsonistic, an increase in the minimum wage from
W2 to W3 would

Question

Quizplus · Accepted Answer

In a monopsonistic labour market, the employer has market power and can set the wage rate below the marginal revenue product of labour. If the minimum wage is increased from W2 to W3, the employer would have to increase the wage rate and would likely hire fewer workers, leading to unemployment where there was previously none.

FIGURE 14- 5 -Refer to Figure 14- 5. If This Labour Market Is