Asked by feiben alaze on May 02, 2024
Verified
A monopsonist's market power enables him to hire labor at a marginal cost that is lower than the wage rate.
Monopsonist
is a market condition where there is only one buyer facing many sellers, giving the buyer significant influence over prices.
Marginal Cost
The increase in total cost that arises from producing an additional unit of a good or service.
Wage Rate
The amount of money paid to an employee per unit of time for labor or services rendered.
- Elucidate the principle of marginal labor costs and their connection to wages in markets characterized by monopsony.
Verified Answer
AB
Arianna BasileMay 08, 2024
Final Answer :
False
Explanation :
A monopsonist's market power actually results in a marginal cost of labor that is higher than the wage rate because they must increase wages for all workers to attract additional employees.
Learning Objectives
- Elucidate the principle of marginal labor costs and their connection to wages in markets characterized by monopsony.