In a monopsony model of a labor market, the firm finds that, as more workers are hired, the wage cost per worker stays constant.

Question

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In a monopsony model of labor market, the firm has market power and can affect the wage rate. As the firm hires more workers, it may have to offer higher wages to attract additional workers. Therefore, the wage cost per worker would not stay constant as more workers are hired in a monopsony model.

In a Monopsony Model of a Labor Market, the Firm