Monopolists in the labor market equate the marginal wage with the marginal revenue product to find the desired level of employment for a union.

Question

Quizplus · Accepted Answer

Monopolists in the labor market may use their market power to set wages above the marginal revenue product, leading to a reduction in employment. Unions may negotiate for higher wages and better working conditions, but this can also lead to a decrease in employment if it exceeds the marginal revenue product. Therefore, they do not always equate the marginal wage with the marginal revenue product.

Monopolists in the Labor Market Equate the Marginal Wage with the Marginal