In comparison to an employer in a competitive labour market, a monopsony employer hires _______workers and produces _______ output.
A) fewer; more
B) more; less
C) fewer; less
D) more; more

Question

Quizplus · Accepted Answer

A monopsony employer, being the sole or dominant buyer of labor in the market, has greater market power to set wages lower than in a competitive market. This results in hiring fewer workers because the wage rate is higher than it would be in a competitive market, leading to less output produced due to the reduced labor force.

In Comparison to an Employer in a Competitive Labour Market