A profit-maximizing monopsonist hires both men and women to do a certain task.The two sexes are equally good at this task and are regarded as perfect substitutes.Labor supply curves for both sexes are upward sloping.In order to hire M men, the firm would have to pay men a wage of AM, where A is a positive constant.In order to hire F women, the monopsonist would have to pay a wage of BF^c, where B and c are positive constants.Which, if any, of these conditions necessarily implies that the monopsonist pays a lower wage to women than to men? A) A B B) A

Question

A profit-maximizing monopsonist hires both men and women to do a certain task.The two sexes are equally good at this task and are regarded as perfect substitutes.Labor supply curves for both sexes are upward sloping.In order to hire M men, the firm would have to pay men a wage of AM, where A is a positive constant.In order to hire F women, the monopsonist would have to pay a wage of BF^c, where B and c are positive constants.Which, if any, of these conditions necessarily implies that the monopsonist pays a lower wage to women than to men? A) A > B B) A < c C) c < 1. D) Bc < A. E) C > 2.

Quizplus · Accepted Answer

The wage the monopsonist pays to women is BF^c, which is a function of both B and c. Therefore, the wage paid to women is not necessarily lower than the wage paid to men (AM), which is only a function of A. Option C, which states that c F1F1F1S1 < F1F1F10, suggests that the wage paid to women is lower than it would be in a competitive market, but it does not necessarily imply that the wage paid to women is lower than the wage paid to men.

A Profit-Maximizing Monopsonist Hires Both Men and Women to Do