A Firm That Is a Monopolist in the Output Market

question 79

Multiple Choice

A firm that is a monopolist in the output market and a monopsonist in the input market

• A) will hire the same amount of labor as if perfect competition prevailed in both markets, but pay a lower wage.
• B) will restrict the level of output but not that of employment compared to the perfectly competitive case.
• C) will hire less labor but pay the same wage compared to the perfectly competitive case.
• D) will hire less labor and pay a lower wage compared to the perfectly competitive case.

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Definitions:

Consignment Shop

A retail store where people sell items and the owner of the shop gets a percentage of the sale price when the item is sold.

Noncumulative Preferred Stock

A type of preferred stock that does not entitle the shareholder to dividends that are omitted or not paid during any year.

Common Stock

A type of equity security that represents ownership in a corporation, giving shareholders the right to vote on corporate matters and receive dividends.

Dividend Payment

A distribution of a portion of a company's earnings to its shareholders, usually in the form of cash or stock.