Explain how breaking up the monopsony that baseball team owners had in the players' market could raise the incomes of the players
If the baseball owners were forced to bid against each other for players, their monopsony power would
disappear and the players' wages would rise from the monopsony to the competitive wage. Each team
would face a horizontal marginal labor cost curve at the market wage and hire up to the point where the
marginal revenue product equals the market wage. Essentially, the correct answer explains that the
monopsony wage lies below the competitive wage.
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In the above figure, the deadweight loss is zero if output is
A) 0 units. B) 10 units. C) 20 units. D) 30 units.
It's logical, it's a rule of thumb, it's an economic guideline: As long as MR < MC, and the firm responds by decreasing the quantity it produces,
a. profit will equal zero b. profit will increase c. profit will decrease d. profit will remain unchanged e. the firm will minimize loss