Exhibit 27-3

Refer to Exhibit 27-3. In the absence of collective bargaining, if the profit-maximizing monopsonist were to pay workers what their services were worth to it, it would pay

Question

Exhibit 27-3 ​

Refer to Exhibit 27-3. In the absence of collective bargaining, if the profit-maximizing monopsonist were to pay workers what their services were worth to it, it would pay

Quizplus · Accepted Answer

In the absence of collective bargaining, the profit-maximizing monopsonist will hire workers up to the point where the marginal cost of labor equals the marginal revenue product of labor. This occurs at point E on the graph, where the wage rate is W₃ and the quantity of labor hired is Q3. Therefore, the monopsonist would pay the wage rate of W₃ if it were to pay workers what their services were worth to it.

Exhibit 27-3 ​ Refer to Exhibit 27-3. in the Absence of Collective Bargaining

Exhibit 27-3 Refer to Exhibit 27-3. in the Absence of Collective Bargaining