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3: Monopoly and Market Power

  • Page ID
    43138
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    Thumbnail: A monopsonist employer maximizes profits by choosing the employment level L, that equates the marginal revenue product (MRP) to the marginal cost MC, at point A. The wage is then determined on the labour supply curve, at point M, and is equal to w. By contrast, a competitive labour market would reach equilibrium at point C, where labour supply S equals demand. This would lead to employment L' and wage w'. (CC BY 2.5; SilverStar via Wikipedia).


    3: Monopoly and Market Power is shared under a CC BY-NC license and was authored, remixed, and/or curated by Andrew Barkley (New Prairie Press/Kansas State University Libraries) .

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