Exhibit 11-12 A monopsonist

In Exhibit 11-12, we know this exhibit shows a monopsonistic labor market because:

Question

Exhibit 11-12 A monopsonist

In Exhibit 11-12, we know this exhibit shows a monopsonistic labor market because:

Quizplus · Accepted Answer

A monopsonistic labor market is characterized by the employer having market power, meaning they can affect the wage rate offered to workers. This exhibit shows a monopsonistic labor market because the MFC (marginal factor cost) curve lies above the supply of labor curve, indicating that the employer must offer a higher wage to attract more workers. This creates a situation where the employer has some market power to affect the wage rate. The fact that the MRP (marginal revenue product) curve slopes down is not a necessary condition for identifying a monopsonistic labor market. Similarly, a horizontal market supply of labor curve and an MRP curve lying below the supply of labor curve are not characteristics unique to monopsonistic labor markets.

Exhibit 11-12 a Monopsonist