Question

In: Economics

Monopsonistic exploitation is A.the difference between the number of workers employed by a competitive firm and...

Monopsonistic exploitation is

A.the difference between the number of workers employed by a competitive firm and those employed by a monopsonist.

B. equal to the marginal factor cost of the monopsonist.

C. the difference between the marginal revenue product of labor and the wage paid by the monopsonist.

D. the difference between the monopsony wage and the competitive wage.

Solutions

Expert Solution

Monopsony is a situation in the labour market where there is only a single buyer of the product produced by the labourers i.e. it is a buyers' monopoly. As a result, monopsony power enables firms to pay lower wages and employ fewer workers than in a competitive market.

Monopsonist exploitation refers to a situation in which the monopsonist worker is paid a wage which is less than its marginal product of labour.

Ans. (c)

Rahul Sunny answered 2 years ago
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