The gap between the value a monopsony places on the last worker hired and the wage paid will increase when
A) the supply curve becomes more elastic at the optimum.
B) the supply curve becomes less elastic at the optimum.
C) the supply curve becomes horizontal.
D) the value of the last unit of labor hired is greater than the cost.

Question

Quizplus · Accepted Answer

When the supply curve becomes less elastic at the optimum, it means that the monopsony has more bargaining power over the workers, allowing them to pay lower wages. This leads to an increase in the gap between the value the monopsony places on the last worker hired and the actual wage paid.

The Gap Between the Value a Monopsony Places on the Last