Exhibit 27-11

-Refer to Exhibit 27-11. 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 27-11

-Refer to Exhibit 27-11. 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, collective bargaining can lead to a higher wage than the monopsonist would prefer to pay. This higher wage can result in the monopsony hiring more workers than it would at its preferred wage, as it moves along its labor demand curve to the new equilibrium point determined by the collectively bargained wage.

Exhibit 27-11 ​

Exhibit 27-11