Because the monopsonist takes into account the effect that employment expansion has on wages paid to existing workers, it will
A)pay union workers more than nonunion workers.
B)be exempt from minimum wage laws.
C)employ more and pay more than the corresponding values under competition.
D)employ less and pay less than the corresponding values under competition.

Question

Quizplus · Accepted Answer

A monopsonist, being the sole or dominant buyer of labor in a market, has the power to set wages. Because it must increase wages to attract additional workers, affecting the wages of all workers, it tends to employ fewer workers and pay lower wages than in a competitive labor market.

Because the Monopsonist Takes into Account the Effect That Employment