In a monopsony labor market, if the single employer raises wages to attract more workers, it can lead to an increase in overall employment levels without causing any negative effects on the firm’s profitability.

In a monopsony labor market, there is only one employer who has significant control over wages and employment. When this employer raises wages to attract more workers, it can lead to more people wanting to work for them, thus increasing overall employment levels. For example, if a local factory decides to pay higher wages, more job seekers might apply, allowing the factory to hire additional workers without losing money. This is because the higher wages can lead to increased productivity and lower turnover, which can ultimately benefit the firm's profitability. Therefore, raising wages in a monopsony can create a win-win situation for both the employer and the employees.