For a monopsonistic hirer of labor,the gap between labor's marginal revenue product and its wage rate will be greater:

Question

Quizplus · Accepted Answer

The gap between labor's marginal revenue product and its wage rate in a monopsony will be greater the more inelastic the supply curve for labor. This is because when the supply of labor is inelastic, workers have fewer alternatives, allowing the monopsonistic hirer to pay lower wages compared to the marginal revenue product of labor without causing a significant reduction in the quantity of labor supplied.

For a Monopsonistic Hirer of Labor,the Gap Between Labor's Marginal