A monopsonist is currently employing 500 workers at the wage of $11 per hour and its...
A monopsonist is currently employing 500 workers at the wage of $11 per hour and its marginal wage cost is $14. Which of the following can be expected if the government imposes a minimum wage of $13?
A. Employment at this firm will rise.
B. Employment at this firm will fall.
C. Employment at this firm will be unaffected.
D. The firm’s total wage bill will fall.
E. The firm’s marginal wage cost will rise
Homework Answers
Initially equilibrium wage = $11 and employment level = 500
Minimum wage = $13, due to this firm would hire less number of workers.
Thus, the correct option is B.) Employment at this firm will fall.
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