In a bilateral monopoly, the wage rate is likely to be _______ than the value of marginal product of labour and _______ than in a pure monopsony.
A) lower; lower
B) higher; higher
C) lower; higher
D) higher; lower

Question

Quizplus · Accepted Answer

In a bilateral monopoly, where a single employer (monopsony) faces a single union (monopoly), the wage rate is typically negotiated to be higher than in a pure monopsony (where the employer has more power due to being the only buyer of labor) but lower than the value of the marginal product of labor (which would be the wage in a perfectly competitive market).

In a Bilateral Monopoly, the Wage Rate Is Likely to Be