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Economics Today
Found in: Page 667

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Short Answer

Based on the information in and your answer to Problem 29-20, how much more or less does the monopsonist pay as an hourly wage rate in relation to the additional revenue that the 1,000 th unit of labor generates for the firm?

The monopsonist pays an hourly wage rate of $20

See the step by step solution

Step by Step Solution

Step 1:  Given Information

At the point when the unions expect higher pay and proportion of the positions in the unionized business, there will be an overabundance supply of work, as less work is utilized in the business, which prompts more noteworthy joblessness.

Step 2: Explanation

If the Monopsonist brings to the table higher wages. It faces a vertical inclining supply bend for work. To enlist more specialists, it needs to raise wage rates, including the compensation of all its ongoing labourers. In this manner, the marginal cost of recruiting one more unit of work is rising. In the accompanying chart, we can see that MFC and MRP are converging each other at point 'A', however, the ideal compensation is not entirely settled on the supply bend of a work.

Subsequently, the ideal compensation rate will be $20 each hour and the ideal amount of work will be1000 work units.

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