Senator Approxmire opposes a proposal requiring that the monopsonist pay a minimum wage of at least W min , stating: "Even if the labor market is monopsonistic, economic theory unambiguously demonstrates that imposing a minimum wage causes employment to fall." Senator Approxmire
A. Correct because the law of demand states that as the wage rises, the firm demands less
labor
B. Incorrect because the monopsonist would offer a wage of W A , which is higher than W min ,
and maintain its employment at L 1
C. Incorrect because the monopsonist's effective MRC curve becomes ABCD, which means
that it will choose to hire more workers, from L 1 to L 2 , following the imposition of the inimum wage
D. Correct because the graph indicates that at the wage of W min , the monopsonist would not
make a profit from hiring labor and so would not hire any at all
C. Incorrect because the monopsonist's effective MRC curve becomes ABCD, which means
that it will choose to hire more workers, from L 1 to L 2 , following the imposition of the inimum wage
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