In a monopsony labor market, a minimum wage set equal to the competitive market equilibrium wage rate can ________ the wage rate and ________ employment.

Question

Quizplus · Accepted Answer

In a monopsony labor market, a minimum wage set equal to the competitive market equilibrium wage rate will raise the wage rate and decrease employment. This is because the monopsony will have to pay a higher wage to attract workers, but it will also reduce the number of workers it hires in order to keep its costs down.

In a Monopsony Labor Market, a Minimum Wage Set Equal