Which of the following is characteristic of a labor market that is a monopsony?
A) The type of labor available is relatively mobile from one industry to another.
B) The supply curve for labor lies above the marginal resource cost curve of the firm.
C) The wage rate the firm must pay varies directly with the number of workers it employs.
D) The firm's employment is a small portion of the total employment of that type of labor.

Question

Quizplus · Accepted Answer

In a monopsony, the firm is the sole or dominant employer in the labor market, so it faces an upward-sloping labor supply curve. This means that to hire additional workers, the firm must pay a higher wage rate, which varies directly with the number of workers it employs.

Which of the Following Is Characteristic of a Labor Market