AP Microeconomics / Unit 5: Factor Markets
5.4 Monopsonistic Markets
Notes
A monopsony is a single buyer of labor (a company town).
- MRC is above the wage because raising pay for one worker raises it for all.
- Hires fewer workers and pays lower wages than a competitive market.
Practice
Compared with a competitive labor market, a monopsony:
Market power over wages.
In a monopsony, MRC is:
Must raise everyone's pay.
A minimum wage in a monopsony market can:
Removes the reason to restrict hiring.
Ready for more? Take the Unit 5 test.