Asked by Quinn Duncan on Apr 27, 2024
Verified
Which of the following is not correct?
A) Other things equal,a monopsonist will pay a lower wage rate than will a firm hiring labor competitively.
B) A monopsonistic employer will pay workers a wage rate equal to their MRP.
C) A purely competitive seller will pay workers a wage rate equal to their MRP.
D) An imperfectly competitive seller will employ additional workers as long as the MRP of additional workers exceeds their MRC.
Monopsonist
A monopsonist is a market condition where there is only one buyer facing many sellers, allowing the buyer to exert significant control over prices.
- Explore the implications of monopsony for wage rates and employment levels.
Verified Answer
VS
Valerie SanchezApr 28, 2024
Final Answer :
B
Explanation :
A monopsonistic employer will pay workers a wage rate lower than their MRP, as they have bargaining power due to their market dominance in hiring labor. A purely competitive seller will indeed pay workers a wage rate equal to their MRP, but not a monopsonistic employer. Option C is correct as it describes the behavior of a purely competitive seller. Option D is also correct as it follows the rational decision-making process of any firm, where they will hire additional workers as long as the MRP of additional workers exceeds their MRC. Therefore, option B is not correct as it contradicts the behavior of a monopsonistic employer.
Learning Objectives
- Explore the implications of monopsony for wage rates and employment levels.
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