Compared to a competitive labor market, a firm with monopsony power in the labor market would...

Compared to a competitive labor market, a firm with monopsony power in the labor market would pay a

A. higher wage rate and hire more workers.

B. higher wage rate and hire fewer workers.

C. lower wage rate and hire more workers.

D. lower wage rate and hire fewer workers.

E. lower wage rate but hire the same amount of workers.

Expert Solution

Option

D. lower wage rate and hire fewer workers

A monopsony is an only one firm in the market, it means workers will get work with the one firm only so the firm can decrease the wage below perfectly competitive market wage as the firm has power over wage.it hire fewer workers.

Rahul Sunny answered 2 years ago

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Compared to a competitive labor market, a firm with monopsony power in the labor market would...

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