Question

Refer to the graph of the labor market below. What is the job vacancy rate (6) when 0.25? 213.0000 Incorrect Question 14 0/0.6 pts Refer to the graph of the labor market below. Which wage rate best corresponds with an increase in the market power of firms? 340

Answer 1

0.03

Employment vacancy rate is 0.03 while FI=0.75.
The wage rate is $25, which indicates a reduction in market power, not the lowest amount of market power.

$25

Monopsony on the labor market means that there is a single employer. When there is only one employer against a number of employees, it enjoys the strength of a monopsony. Monopsony control helps the company to set the wage rate, which ensures that a monopsony company is not a labor price-taker, but a price-maker.
In the graph shown in the question, the unemployment level of 0.05 best corresponds to the increase in monopsony power. As we know, a monopsony company would set salaries on the lower side and will therefore aim to hire fewer employees in order to maximize its income, although there may be a restriction against such monopsonist actions on the basis of the minimum wage rule. In the event that the government has set a minimum wage limit, the monopsonist must follow the legal structure.
Thus, in the graph of the minimum wage shown in the horizontal workers 'demand curve, a compulsory wage rate of $25 is set, the monopsonist will obey the wage rate corresponding to the unemployment rate of $0.05. It should be noted here that the monopsonist must obey the minimum wage limit, because it is a legal requirement, but it is free to decide on the number of employees to be employed, thus, in order to hold the labor cost to a minimum and income to a maximum, the monopsonist must hire fewer jobs and cause unemployment.

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