Monopsony Minimum Wage Effects
In a monopsonistic labor market, what is the effect on the level of employment if a minimum wage is set above the current equilibrium wage?
A
Employment will stay constant because there’s only one employer making decisions about hiring.
B
Employment will definitely decrease because employers will hire less due to increased costs.
C
Employment will definitely increase because workers are paid more.
D
Employment may either increase or remain unchanged depending on how far above equilibrium wage rate the minimum wage is set.
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