When a minimum wage is imposed in a monopsony labor market, the _____ may not reduce the _____.
A)minimum wage; number of employers
B)minimum wage; number of jobs
C)number of employers; minimum wage
D)number of employers; product price

Question

Quizplus · Accepted Answer

In a monopsony labor market, there is only one employer who has market power to set the wage rate below the marginal revenue product of labor. Imposition of a minimum wage in such a market will increase the wage rate, which may lead to a reduction in the number of jobs available, but the number of employers remains the same. Therefore, choice B is the best answer.

When a Minimum Wage Is Imposed in a Monopsony Labor