Principles of Microeconomics / Unit 13 MIC 1219 short lesson, about 20 seconds
A Minimum Wage: Competition Against Monopsony
Captions available
The idea
In a competitive market a minimum wage above equilibrium cuts employment, like any price floor. Under monopsony it can raise employment, because it flattens marginal factor cost at the floor.
In practice
A floor of one twenty makes the town's employer hire a fifth worker.
Where people slip
Whether real markets are monopsonistic enough to matter is disputed; both readings are reported.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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