When an employer exerts monopsony power:
A)product prices will be higher.
B)product prices will be lower.
C)wages will be higher.
D)wages will be lower.

Question

Quizplus · Accepted Answer

When an employer exerts monopsony power, they have significant market power in the labor market, which means they can pay lower wages than they would have to in a more competitive labor market. This is because workers can't easily find another employer to work for, so the employer can pay less than the market wage and still attract workers. Therefore, wages will be lower.

When an Employer Exerts Monopsony Power