Monopsonist And Trade Unions

Question 1

What is a monopsonist?

Answer 1

A sole/dominant buyer

Question 2

What is an imperfectly competitive market?

Answer 2

One where the first is a dominant or monopoly buyer

Question 3

Where does Q occur on a monopsonist diagram?

Answer 3

Where MCL = MRP

Question 4

Why is a monopsony a possible market failure?

Answer 4

They restrict employment and suppress wages

Question 5

Where would a competitive market wage be in a monopsony diagram?

Answer 5

At equilibrium where MRP = S

Question 6

What is the argument for the government being a monopsonist?

Answer 6

Restrict employment and suppress wages eg of teachers
However: govt isn’t a short run profit maximiser as they are in a budget deficit (macro link)

Question 7

Why is the supply of labour curve upwards sloping?

Answer 7

Not everyone is willing to work for the same wage

Question 8

what is a trade union?

Answer 8

• organisation of members who join together to further the interests of its members

Question 9

what is collective bargaining?

Answer 9

process of negotiating on wages, pensions and working conditions

Question 10

what affects the success of unions?

Answer 10

• legislations
• union density - amount of people in union as a percentage of people in that industry
• economic climate - budget surplus/deficit (fall in deficit may allow for higher wages as the largest monopsonist employer is the government)
• public support

Question 11

why would a trade union in perf comp market not happen?

Answer 11

• opportunity cost of being in a union
• trade unions don’t reduce employment
• imperfect info
• behavioural economics - bounded rationality.

Question 12

why has there been a long term decline in trade union power?

Answer 12

• ban to illegal striking
• ballot voting
• have to see if members are willing to vote
• changing the way we work
• rise on flexible labour markets
• increasing globalisation has reduced power of employees

Question 13

reasons against trade unions?

Answer 13

• increase wages = cost push inflationary pressures
• high wages is anticompetitive
• may limit dynamic efficiency as the threat of tech could replace jobs

Question 14

reasons for trade unions?

Answer 14

• counter monopsony power
• better working conditions
• increase pay

Question 15

what does the success of a trade union depend on?

Answer 15

• sector/market
• most industries are imperfect