If an industrial union is formed to bargain with a monopsonistic employer, then in this labor market,
A) the resulting wage rate will always be above the competitive level.
B) employment may either increase or decrease.
C) employment will increase.
D) employment will decrease.

Question

Quizplus · Accepted Answer

The formation of an industrial union may lead to an increase in bargaining power for workers, which could result in a higher wage rate. However, if the monopsonistic employer faces constraints in terms of their ability to increase output or pass on higher labor costs to consumers, they may respond by reducing employment. Therefore, the employment outcome is uncertain and may depend on the specific context of the labor market.

If an Industrial Union Is Formed to Bargain with a Monopsonistic