refer to the following diagram
-Suppose this labor market is monopsonistic,so that the wage is W₁ and employment is Q₁.If W* is imposed as the minimum wage,then employment in this market:

Question

refer to the following diagram -Suppose this labor market is monopsonistic,so that the wage is W₁ and employment is Q₁.If W* is imposed as the minimum wage,then employment in this market:

Quizplus · Accepted Answer

In a monopsonistic labor market, a minimum wage set above the current equilibrium wage can increase employment because it reduces the monopsony power of the employer. The employer must now pay the minimum wage W* to all employees, which can lead to an increase in employment to where the supply of labor equals the demand at the new wage rate, assuming W* is set between the original monopsony wage and the competitive equilibrium wage.

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