In a monopsonistic labor market, how does the marginal analysis of hiring additional workers affect economic welfare compared to a competitive labor market?

In a monopsonistic labor market, there is only one employer who has significant control over wages and hiring. When this employer considers hiring additional workers, they look at the marginal cost of hiring each new worker, which includes the wage they must pay. This is different from a competitive labor market, where many employers compete for workers, leading to higher wages and more job opportunities. Because the monopsonist may pay lower wages and hire fewer workers than in a competitive market, overall economic welfare can be reduced, as fewer people have jobs and earn income. For example, if a factory owner is the only employer in town, they might pay workers less than what they would earn if multiple factories were competing for their labor, resulting in lower overall happiness and economic activity in the community.