Th3.5: ^^ Bilateral Monopoly

Question 1

What is a bilateral monopoly?

Answer 1

when there is both a monopoly and monopsony in a labour market

Question 2

Refer to PP

Look at Graph 46. The firm is monopsonist and wants to employ at Q2W2. However, the union may decide to set…

Answer 2

a minimum wage at W1 and ensure that there is no willing to work below this price, creating a kinked supply curve

Question 3

Refer to PP

Look at Graph 46. What are the purple curves?

Answer 3

the new MC and AC curves

Question 4

Refer to PP

Look at Graph 46. The wage that is set will depend on…

Answer 4

the relative bargaining strength of both parties - this is dependent on a number of factors, including the size of the union and the strength of the economy

Question 5

When might unions have less bargaining power?

Answer 5

in a time of economic recession and unemployment the unions may have less bargaining power and wage is most likely to be down at W1 - REFER TO GRAPH 46

Question 6

In times of full employment, unions may have…

Answer 6

the power to influence and wages could be at W3

Question 7

Refer to PP

Look at Graph 46. What does this diagram highlight?

Answer 7

that Unions can have a positive impact on both wages and the number of people employed - they are able to increase wages to W3 without negatively impacting the number of workers

Question 8

Refer to PP

Look at Graph 46. This increase in wages and employment is able to…

Answer 8

make the economy more efficient

Question 9

Draw Graph 46 three times!

Answer 9

go go go!