📚 Learning Guide
Monopsony in Labor Markets
easy

If a monopsony employer increases wages to attract more workers, what is the primary reason for this action?

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Choose the Best Answer

A

To reduce the number of job applicants

B

To increase the supply of labor available

C

To comply with government regulations

D

To maintain a fixed wage level

Understanding the Answer

Let's break down why this is correct

Answer

A monopsony employer is a company that is the only buyer of labor in a specific market, meaning it has a lot of control over wages. When this employer raises wages, the main reason is to attract more workers because they need more employees to meet their business needs. By offering higher pay, the employer can draw in job seekers who might otherwise choose to work elsewhere or not work at all. For example, if a small town has only one factory that pays low wages, increasing the pay can help the factory fill open positions, ensuring it has enough workers to operate efficiently. This strategy not only helps the employer but also improves job opportunities for workers in that area.

Detailed Explanation

When a monopsony employer raises wages, they want to attract more workers. Other options are incorrect because Some might think that raising wages would scare away applicants; It's a common belief that employers raise wages just to follow rules.

Key Concepts

Monopsony in Labor Markets
Wage Determination
Labor Supply
Topic

Monopsony in Labor Markets

Difficulty

easy level question

Cognitive Level

understand

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