Why does a monopsonist's marginal expenditure curve lie above the labor supply curve?
What will be an ideal response?
To hire additional labor, the monopsonist must increase the wage paid to all units of labor. Thus the marginal expenditure of the next unit of labor is the higher wage plus the wage increase paid to all previously hired labor.
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Refer to Figure 13-1. Ceteris paribus, a decrease in the price level would be represented by a movement from
A) AD1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point A.
Refer to Figure 19-5. Suppose the pegged exchange rate is $0.14/yuan and U.S. consumers increase their demand for Chinese products. Using the figure above, this would
A) increase the surplus of Chinese yuan. B) decrease the shortage of Chinese yuan. C) decrease the surplus of Chinese yuan. D) increase the shortage of Chinese yuan.