Because the labor supply curve for a monopsonist is upward sloping,the monopsonist
A) hires zero units of labor.
B) chooses the perfectly competitive quantity of labor.
C) must increase the wage to attract more units of labor.
D) must take the wage as given by the market.

Question

Quizplus · Accepted Answer

Since the labor supply curve for a monopsonist is upward sloping, the monopsonist must increase the wage to attract more units of labor. This is because the monopsonist is the only buyer of labor in the market and workers have no other option but to sell their labor to the monopsonist, giving the monopsonist some market power to set the wage below the competitive level. However, if the monopsonist wants to hire more units of labor, it must increase the wage to compensate for the cost of attracting additional workers.

Because the Labor Supply Curve for a Monopsonist Is Upward