A monopolist who faces a horizontal labor supply curve will demand less labor than he would if he acted competitively.

Question

Quizplus · Accepted Answer

A monopolist facing a horizontal labor supply curve has market power and can set their wage rate below the competitive level. This means they can hire fewer workers at a lower wage rate than in a competitive labor market. In a competitive labor market, the wage rate is determined by the intersection of the labor supply and demand curves, meaning the monopolist would face a higher wage rate and hire more workers if they were to act competitively.

A Monopolist Who Faces a Horizontal Labor Supply Curve Will