So lets say u have afirm that is BOTH a monopoly and a monopsony. How would tihs firm choose the quantity of labour to employ? What wage would this firm pay?
2006-10-03 07:02:48 · 2 answers · asked by tofu202003 2 in Social Science ➔ Economics
I don't know ask Vince Mcmahon..
2006-10-03 07:12:42 · answer #1 · answered by chefzilla65 5 · 0⤊ 0⤋
Theory: As all firms do. Nothing will change about the employment or wage policy of the firm. The reason is that the firm is a monopoly and monopsony in the goods/service market. It has no monopoly or monopsony role in the labor market. In other words, other firms from other industries compete with this firm in the labor market. (This is what economic theory and most texbooks will state)
Practice: The labor market may be seggregatedand the suppliers of labor that are specialized in a specific area may be negatively affected with a monopoly/monopsony in this area. For example let's assume a country has only one nuclear reactor firm. The firm is the monopoly of nuclear energy and the monopsony of uranium. Therefore all nuclear engineers need to go to this one firm to find a job. So labor supply is very inelastic and the firm will be able to hire a large number of engineers with a minimum wage.
2006-10-04 16:18:40 · answer #2 · answered by daniel_cohadier 3 · 0⤊ 0⤋