Monopsonistic Labor Markets

Front

What characteristic defines this market as a monopsony?

Back

The firm must raise wages for all workers when hiring additional workers.

Front

A labor market graph shows that the marginal factor cost (MFC) curve is above the labor supply curve. Why is this the case?

Back

The firm must pay a higher wage to all workers when hiring additional workers.

Front

In a monopsonistic labor market, where does the firm set the wage?

Back

At the intersection of MFC and MRP, but paying the wage on the supply curve at that quantity.

Front

A labor market graph for a monopsony shows a new binding minimum wage above the original equilibrium wage but below the marginal revenue product (MRP). What is the likely effect?

Back

Employment increases because the firm now hires where MRP = wage instead of MRP = MFC.

Front

A graph shows two labor markets: a perfectly competitive labor market with wage Wc and employment Qc, and a monopsonistic market with wage Wm and employment Qm. How do these two markets compare?

Back

The monopsonist hires fewer workers and pays a lower wage.

Front

A firm's MRP curve is downward sloping. What does this imply about labor demand?

Back

The firm values additional workers less as more are hired.

Front

A graph shows a monopsonistic labor market with a minimum wage set below the equilibrium wage. What happens to employment?

Back

Employment remains unchanged.

Front

On a monopsonistic labor market graph, where does the firm set employment?

Back

Where MRP equals MFC

Front

A labor market graph shows a minimum wage set above both the monopsonistic wage and the competitive wage. What is the likely effect?

Back

The firm reduces employment, similar to a competitive market.

Front

A graph shows a relatively inelastic labor supply curve in a monopsonistic market. If the firm raises wages, what is the most likely effect?

Back

A small increase in employment