Th3.5: ^^ Monopsony in the Labour Market Flashcards

1
Q

In a monopsony market, there is only one…

A

buyer of the labour

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2
Q

In this situation, businesses know if they want to increase their labour force they will have to…

A

increase the wage they offer and, just like monopsony product markets, an increase in the wage for one increases the wage for all

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3
Q

Therefore the MC curve is above the supply curve (AC) of labour because…

A

it costs more to employ an additional worker than the average cost of labour

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4
Q

How will a firm determine how many workers to employ?

A

where the cost of employing them is equal to the value of that worker to the company

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5
Q

Refer to PP

Look at Graph 44. Where do they employ?

A

where MC = D at Q1 and at this output they will pay their workers W1 (determined by the S curve)

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6
Q

Refer to PP

Look at Graph 44. Compared to a perfectly competitive market (which would produce at W2Q2) they…

A

employ less people at a lower wage rate

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7
Q

Draw Graph 44 three times!

A

yayayayayyay! keep going i beg

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