Use the figure below to answer the following questions.

Figure 18.3.2
-If a union and the monopsonist in Figure 18.3.2 agree to bargaining, the outcome is an hourly wage rate

Question

Use the figure below to answer the following questions.
  
Figure 18.3.2
-If a union and the monopsonist in Figure 18.3.2 agree to bargaining, the outcome is an hourly wage rate

Quizplus · Accepted Answer

The monopsonist's marginal cost curve intersects the supply curve of labor at an hourly wage rate of $4, which is the monopsony wage rate without bargaining. However, with bargaining, the union can negotiate for higher wages. The bargaining outcome will be at the intersection of the marginal cost curve and the union's bargaining curve, which is between $4 and $9 in this case. Therefore, the best answer is C, which is between $4 and $9.

Use the Figure Below to Answer the Following Questions