refer to the following diagram
-Suppose this firm is a perfectly discriminating monopsonist.If W* is imposed as the minimum wage,then:

Question

Quizplus · Accepted Answer

As a monopsonist, the firm has market power to set the wage lower than the marginal revenue product of labor (MRPL), leading to lower wages and a lower level of employment than in a competitive market. When a minimum wage (W*) is imposed, it raises the wage above the MRPL, resulting in a decrease in the quantity of labor demanded by the firm. In the given diagram, the imposition of W* shifts the labor supply curve from S1U1B13 to S1U1B12, reducing the quantity of labor demanded from QS1U1B13 to QS1U1B12. Therefore, employment will fall from QS1U1B13S1U1B0 to QS1U1B12S1U1B0. Hence, the correct choice is C.

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