Use the following to answer question(s): Minimum Wage and Monopsony

-(Exhibit: Minimum Wage and Monopsony) If a $30 minimum wage is imposed, the monopsony firm in the exhibit would maximize profits by hiring _______ units of labor per period at the wage _______ .

Question

Use the following to answer question(s): Minimum Wage and Monopsony
 
-(Exhibit: Minimum Wage and Monopsony) If a $30 minimum wage is imposed, the monopsony firm in the exhibit would maximize profits by hiring _______ units of labor per period at the wage _______ .

Quizplus · Accepted Answer

A monopsony firm will hire where the marginal expenditure curve (MEC) intersects the marginal revenue product (MRP) curve. If a $30 minimum wage is imposed, the firm will hire up to the point where the MRP equals $30, assuming this point is at L₂. The firm must pay the minimum wage rate, which is $30, to all units of labor.

Use the Following to Answer Question(s): Minimum Wage and Monopsony