Principles of Microeconomics / Unit 17 MIC 1634 short lesson, about 20 seconds
Power in the Labor Market
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The idea
A monopsonist hires where marginal revenue product equals rising marginal factor cost and pays the supply wage: fewer workers, lower wage. A union wage above equilibrium: fewer jobs, excess supply. Union against monopsonist: the wage is indeterminate and employment can rise.
In practice
A minimum wage costs jobs under competition and can add them under monopsony.
Where people slip
The market a policy faces decides its effect.
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