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Suppose the formerly competing firms in review question 1 form an employers’ association

Suppose the formerly competing firms in review question 1 form an employers’ association

 Suppose the formerly competing firms in review question 1 form an employers’ association that hires labor as a monopsonist would. Describe verbally the effect on wage rates and employment. Adjust the graph you drew for review question 1, showing the monopsonistic wage rate and employment level as W2 and Q2, respectively. Using this monopsony model, explain why hospital administrators sometimes complain about a “shortage” of nurses. How might such a shortage be corrected?

5. Assume a monopsonistic employer is paying a wage rate of Wm and hiring Qworkers, as indicated in Figure 15.8. Now suppose an industrial union is formed that forces the employer to accept a wage rate of Wc. Explain verbally and graphically why in this instance the higher wage rate will be accompanied by an increase in the number of workers hired.

Abhinav 05-Dec-2019

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