In a monopsony environment,an increase in the minimum wage ______ employment.
A) can increase or decrease
B) if the labor market is closed will increase
C) if the labor market is open will increase
D) will decrease
E) will not change

Question

Quizplus · Accepted Answer

In a monopsony, the employer has significant control over the labor market. An increase in the minimum wage can lead to increased employment because it can force the employer to hire more workers at a higher wage, reducing the monopsonistic power and potentially increasing the quantity of labor demanded. However, in some cases, it might also lead to a decrease if the wage increase is too high, making it unprofitable for the employer to hire as many workers.

In a Monopsony Environment,an Increase in the Minimum Wage ______