For a monopsonist, the supply of labor facing the firm is:

Question

Quizplus · Accepted Answer

A monopsonist is the only buyer in the market and therefore has significant market power to set the wage rate. The supply of labor facing the firm is identical to the supply curve facing the market because the monopsonist is the only buyer and has a significant influence on the wage rate. The supply curve is not perfectly horizontal because the monopsonist cannot hire an unlimited amount of labor at a fixed wage rate. The summation of each firm's demand for labor is not relevant to a monopsonist since it is the only buyer in the market.

For a Monopsonist, the Supply of Labor Facing the Firm