Factor Markets (27)

What is a monopsony

When there is a single buyer of a product

Is w(x) an increasing or decreasing function. Explain

Increasing, the more x the firms wants to hire, the higher the price it must offer

Is a monopsonist a price maker or price taker for wages

Price maker

So how are wages set by monopsonists?

Looking at the supply curve of workers

Does a monopsonist operate where the supply curve is elastic or inelastic

Elastic

Is a monopsonist a price maker or price taker for output. Why

Price taker, they act in a competitive market

What is the MR for a monopsonist

P x MP

Design method to discern impacts of minimum wages

Differences in differences

Argument of people for versus against increasing minimum wage

Against: increasing MW causes decrease in supply for firms 

For: increasing MW causes increase in supply with a monopsony because they’ll just hire more workers