Lab
The Monopsony Graph
Each graph shows the only employer in a labor market: labor supply, its marginal factor cost and its marginal revenue product. Name the two upward-sloping lines and title both axes first. Then decide what the situation changes, move it, and drag the round point to the wage the firm pays and the number of workers it hires.
Challenges
- At your point, compare the wage with MFC and with MRP. Which is highest, and why?
- Find where supply meets MRP. Why does the monopsony not hire that many workers?
- In each situation that moves a line, say whether the wage and the number of workers rose or fell.