When a bilateral monopoly exists, the actual market wage will depend on the
A) intersection of supply and demand
B) marginal expenditure and marginal revenue
C) intangible bargaining power of the two parties

Question

Quizplus · Accepted Answer

When a bilateral monopoly exists, both the buyer and seller have some bargaining power which affects the market wage. Depending on their relative bargaining power and ability to negotiate, the actual market wage can be higher or lower than what would be determined by the intersection of supply and demand or marginal expenditure and marginal revenue. Therefore, the intangible bargaining power of the two parties is the most important factor influencing the actual market wage in a bilateral monopoly.

When a Bilateral Monopoly Exists, the Actual Market Wage Will