Refer to Exhibit 28-11. The firm in the exhibit is a monopsony. We have delibera

Question

Refer to Exhibit 28-11. The firm in the exhibit is a monopsony. We have deliberately not identified the three curves in the exhibit. They are simply curves 1, 2, and 3. If (union) collective bargaining with the monopsony guarantees the wage rate that workers will be paid is W2, then the factor supply curve is

curve 2.

curve 3.

the curve that starts at W2, goes to point B, then down to point C, then moves up curve 2.

the curve that starts at W2, goes to point D, and then moves up curve 2.

the curve that starts at W2 and goes to point D.

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Solution

Explanation / Answer

Curve 2 is the supply curve. In monospony the labor market is equillibrium there is only one employer who pay the same wages to all the employees. The curve related to the wage w2 paid by the employer.

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