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Economics
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31 Oct 2020

15. A monopsony hires ____________ workers than that would be hired in a competitive labor market.

a. more

b. fewer

c. the same number of 

d. the highest number of 

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Microeconomics
Skill
Understanding the Labor Markets
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Raushan Raj
Raushan RajLv8
31 Oct 2020

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Related questions

Question 1:

Discuss various types of barriers that work in favor of a monopoly (legal barrier, a technological barrier, ownership of a key resource, natural monopoly, scale economy)

Question 2:

Assume Hershey, Pennsylvania's only employer is Hershey Chocolate company which means it is a monopsony (single buyer) in the local labor market. Also assume, all workers belong to one trade union implying the monopoly (one seller) in the labor market. Discuss the equilibrium wage and number of workers hired in this scenario relative to the competitive labor market equilibrium scenario.

Part of the U.S. labor market is competitive and the remaining market is characterized by monopsony and labor union. Additionally, a significant part of U.S. workers earn minimum wage. (a). Define monopsony and labor union and explain how wage rate is determined in each of these labor markets. (b). What is the effect of minimum wage on employment? Explain fully.

Economic theory unambiguously predicts that total employment will be reduced when an effective minimum wage law is introduced:

A. in a monopsony labor market.

B. in a perfectly competitive labor market if all workers in this market are covered by the minimum wage law.

C. in a perfectly competitive market, even if some workers and firms are not covered by the minimum wage law.

D. under no circumstances.

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