Question

In: Economics

Because the monopsonist takes into account the effect that employment expansion has on wages paid to existing workers, it will:

Because the monopsonist takes into account the effect that employment expansion has on wages paid to existing workers, it will:

A.Pay union workers more than nonunion workers

B.Be exempt from minimum wage laws

C.Employ more and pay more than the corresponding values under competition

D.Employ less and pay less than the corresponding values under competition

Solutions

Expert Solution

Answer:

Correct answer:

D.Employ less and pay less than the corresponding values under competition

Because the monopsonist takes into account the effect that employment expansion has on wages paid to existing workers, it will Employ less and pay less than the corresponding values under competition. As in monopsony firm can reduce its wages only by losing some employee.

Rahul Sunny answered 2 years ago
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