A monopsonistic employer:

Question

Quizplus · Accepted Answer

Monopsonistic employers have market power in hiring workers, which allow them to pay wages lower than what would exist in a perfectly competitive labor market. As a result, the marginal resource cost of hiring additional workers is higher than the wage rate. This is because the employer must increase the wage rate for all workers to attract more labor, meaning the marginal cost of hiring additional workers includes not only the wage rate but also the additional cost of increasing wages for current employees.

A Monopsonistic Employer