If a monopsony must negotiate with a union, then the wage will probably be
A) the same as if there had been no union.
B) more than the marginal cost of labour.
C) more than the value of marginal product.
D) more than what it would have been without a union but not more than the value of marginal product.

Question

Quizplus · Accepted Answer

When a monopsony (a market condition where there is only one buyer) must negotiate with a union, the bargaining power of the workers increases. This typically results in higher wages than what would have been paid if the union were not present. However, it is unlikely that the wage would exceed the value of the marginal product, as this would not be sustainable for the employer. The value of the marginal product represents the additional revenue generated by employing one more unit of labor, and paying more than this amount would lead to losses on each additional worker employed.

If a Monopsony Must Negotiate with a Union, Then the Wage