IC: Determination of RWR and LoE

• What is monopsony power in the labor market?

  Only one buyer of labor exists
• How does monopsony power affect wage setting?

  The firm can set wages lower than equilibrium
• Why is the marginal cost of adding an extra worker higher in a monopsony?

  All workers must be paid more to hire one
• What does it mean when MC = MRP in a monopsony?

  The firm maximizes profit by employing Q2 workers

  
• How does the wage W2 compare to the competitive wage in a monopsony?

  W2 is lower than the competitive wage
• What is the impact of monopsony on employment and wage rates?

  Both are below perfect competition levels
• What role do trade unions play in the labor market?

  They push for higher wages and job security
• How can trade unions limit the supply of labor?

  By closing firms or threatening strikes
• What potential negative effect can higher wages from trade unions have?

  They could cause unemployment
• How do trade unions counteract monopsony power?

  By advocating for higher wages and job security
• What is a consequence of imperfect information in the labor market?

  Workers may not find higher paying jobs
• How does imperfect information affect workers' productivity?

  It limits their skill improvement and progression
• What is the overall effect of imperfect information on the labor market?

  It makes the market inefficient