ECON 3240 Study Guide - Monopsony, Competitive Equilibrium, Demand Curve
Document Summary
This statement is true if the prevailing market wage is above the wage that would. In a competitive equilibrium, there is no monopsonistic power in the labour market, and the equilibrium wage is determined by the intersection of total labour demand and total labour supply. On the other hand, if the prevailing market wage is below above the wage that would prevail in a competitive equilibrium due to the exercising of monopsony power, then the statement is false. This is explained thoroughly in the sub-section entitled expected impact: monopsony in the. There is an intuitive explanation, a formal exposition with graphical analysis, and an example with figures. Note that this somewhat tricky result that the implementation of a minimum wage can actually raise the level of employment given a monopsony applies to a particular range of wages. This range is between the monopsony wage and the competitive equilibrium wage.
