A monopsonist will hire fewer workers at a lower wage rate than would prevail in a competitive market.

Question

Quizplus · Accepted Answer

A monopsonist is a single buyer or employer of a particular good or service. In the labor market, this means that the monopsonist has power to set wages and chooses to hire fewer workers than would be hired in a competitive market. This is because the monopsonist can drive down wages without losing all of its labor supply. As a result, the equilibrium wage rate is lower and fewer workers are hired by the monopsonist.

A Monopsonist Will Hire Fewer Workers at a Lower Wage