Asked by Jerry Simmons on May 02, 2024
Verified
A monopsonist faces an upsloping supply curve of labor, but it could face a horizontal demand curve for its product in the output market.
Monopsonist
An entity that is the only buyer in a market, giving it significant control over the price and terms of purchase of goods or services.
Upsloping Supply Curve
A supply curve that shows an increase in quantity supplied as the price increases, indicating a direct relationship between price and quantity supplied.
- Identify the traits of monopsonistic employers and their influence on wages and employment levels.
Verified Answer
LS
Laura SalinasMay 09, 2024
Final Answer :
True
Explanation :
A monopsonist, by definition, is the sole buyer in a market, typically for labor, and thus faces an upsloping supply curve of labor due to increasing marginal costs of hiring additional workers. However, the demand curve for its product in the output market can be horizontal if the product is sold in a perfectly competitive market, indicating that the firm is a price taker for its output and can sell any quantity of its product at the prevailing market price.
Learning Objectives
- Identify the traits of monopsonistic employers and their influence on wages and employment levels.
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