When a labour market is a monopsony,what can we say about the monopsony firm

Question

Quizplus · Accepted Answer

In a monopsony, there is only one buyer of labor, and this gives the firm market power to set the wage rate lower than the marginal revenue product of labor. As a result, the monopsonist hires fewer workers than a competitive firm would in equilibrium, and there is a welfare loss (deadweight loss) from reduced employment and output. The monopsonist's market power in the labor market does not necessarily imply that it has market power in the output market, so it may or may not be competitive in that market. The wage rate in a monopsony is lower than in a competitive market, not higher.

When a Labour Market Is a Monopsony,what Can We Say