Asked by Savannah Fortson on May 22, 2024
Verified
A monopsonistic employer:
A) has a perfectly elastic labor supply curve.
B) is necessarily a monopolist in the product market.
C) confronts a marginal resource (labor) cost that is greater than the wage rate.
D) confronts a marginal resource (labor) cost that is less than the wage rate.
Monopsonistic Employer
A market condition in which a single buyer significantly controls the market as the major purchaser of goods and services.
Marginal Resource Cost
The additional cost incurred by using one more unit of a resource.
- Examine the impact of monopsony on wage levels and employment figures.
Verified Answer
FR
Francisco RomeroMay 26, 2024
Final Answer :
C
Explanation :
Monopsonistic employers have market power in hiring workers, which allow them to pay wages lower than what would exist in a perfectly competitive labor market. As a result, the marginal resource cost of hiring additional workers is higher than the wage rate. This is because the employer must increase the wage rate for all workers to attract more labor, meaning the marginal cost of hiring additional workers includes not only the wage rate but also the additional cost of increasing wages for current employees.
Learning Objectives
- Examine the impact of monopsony on wage levels and employment figures.
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