Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Employers have many choices of workers, leading to higher wages.
B
Employers are the sole purchasers of labor, enabling them to set lower wages.
C
Employees have the power to negotiate wages higher than the market rate.
D
Labor supply is perfectly elastic, allowing wages to fluctuate freely.
Understanding the Answer
Let's break down why this is correct
Answer
In a monopsony labor market, there is only one main employer for many workers, giving that employer significant power over wages and working conditions. This means that the employer can set lower wages than in a competitive market because workers have fewer job options. For example, if a small town has only one factory, that factory can pay lower wages since most workers do not have other places to work. As a result, employees may feel pressured to accept these lower wages because they have limited choices. This relationship shows how the imbalance of power can affect how much workers earn and their overall job satisfaction.
Detailed Explanation
In a monopsony, there is only one employer for many workers. Other options are incorrect because This idea suggests that many employers compete for workers, which raises wages; This option implies that workers can demand higher pay.
Key Concepts
labor market
Topic
Monopsony in Labor Markets
Difficulty
easy level question
Cognitive Level
understand
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