Johnson's Piggery is the only employer in town. Johnson employs 500 workers and pays them each a wage of $8. The MRP of the 500th worker is $10. Johnson's return to monopsony power is

Question

Quizplus · Accepted Answer

Johnson's return to monopsony power is calculated as the difference between the MRP and the wage paid, multiplied by the number of workers. Here, it's ($10 - $8) * 500 = $1,000.

Johnson's Piggery Is the Only Employer in Town