Question 42 Which of the following is true of a monopsony in a labor market? A It faces a labor supply curve that is horizontal at the competitive market equilibrium wage. B Its marginal factor (resource) cost is the same as the market supply curve. C At its optimal level of employment, it pays a wage rate higher than the competitive market wage rate. D The imposition of a minimum wage results in a larger reduction in employment than is true in a competitive market. E Its marginal factor (resource) cost curve lies above the labor supply curve because hiring an extra worker means paying more to existing workers
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A monopsony occurs when there is a single buyer (employer) in a market with many sellers (workers), giving the employer market power to set wages below competitive levels. Show more…
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