A monopsonistic employer in an unorganized (nonunion) labor market will
A) pay a wage rate less than labor's MRP.
B) pay the same wage rate but hire fewer workers than if the market was purely competitive.
C) hire the number of workers indicated by the intersection of the MRC and the labor supply curves.
D) pay a wage rate in excess of labor's MRP.

Question

Quizplus · Accepted Answer

In a monopsonistic employer in an unorganized labor market, the employer has the power to set the wage rate due to the lack of competition among employers. Therefore, the employer will pay a wage rate less than labor's MRP to maximize their profits. If the wage rate was equal to labor's MRP, the employer would hire fewer workers, but still at a lower wage rate than in a purely competitive market.

A Monopsonistic Employer in an Unorganized (Nonunion) Labor Market Will