Asked by Margaret Everett on May 12, 2024
Verified
In monopsony:
A) each firm employs a small portion of the total supply of labor.
B) the workforce is highly mobile.
C) the wage rate paid by the employer varies directly with the number of workers employed.
D) the employer is a "wage taker."
Monopsony
A market structure in which there is only a single buyer of a good, service, or resource.
- Comprehend the characteristics of monopsony in the labor market.
Verified Answer
AM
Ashley MoffattMay 15, 2024
Final Answer :
C
Explanation :
In a monopsony, there is only one buyer (employer) in the market for labor, which gives the employer significant control over the wage rate. As the monopsonist hires more workers, the wage rate must increase to attract additional labor, since they face an upward-sloping supply curve for labor. This means the wage rate varies directly with the number of workers employed, unlike in perfectly competitive markets where employers are "wage takers" and do not have the power to set wages.
Learning Objectives
- Comprehend the characteristics of monopsony in the labor market.
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