jim8z3

ill take a stab at 4 but ive been going for about 10 hours, think of the Monopsony as having the Wage rate on the Y axis and the Quantity of labor on the X axis. since it is the only supplier of the good (labor) it can discriminate against the laborers in paying the lower wage rate that is not market clearing and take advantage of the surplus of labor below the demand curve and above the wage rate. higher surplus for monopsonist, lower for laborers. MR curve for monopolist is a point halfway between 0 and the X intercept of demand curve, not efficient for normal markets. If there were competing companies, they would drive the wage rate up until labor supply intersects labor demand and the market clears. Think Walmart, this is an argument against the company moving into small areas and driving down prices until retail firms go out of business , then supplying below market wages because they can. Think Unions as the counter party to these, negotiating wages so that no labor will be supplied below the market clearing wage rate. Hope this helps , i know it is a little convoluted, i havent studied these for 7 years.