Why can a company with monopsony power in its labor market succeed in paying low wages?
A)Workers don't have other employment options.
B)The employer doesn't have other options for employees.
C)There is a very limited supply of workers.
D)It must charge a low product price, so it cannot afford to pay a high wage.

Question

Quizplus · Accepted Answer

In a labor market with a monopsony power, the employer is the only buyer of labor, giving them the ability to pay lower wages as workers have no other options for employment. If workers attempt to demand higher wages, the employer can simply hire other individuals who have no other options, resulting in a lower wage rate for all workers.

Why Can a Company with Monopsony Power in Its Labor