If a Firm Buys Some Labor in a Competitive Market

question 10

Multiple Choice

If a firm buys some labor in a competitive market and some labor as a monopsonist,the firm is most likely to

• A) pay the same wage to both types of labor.
• B) pay a lower wage to the labor purchased in the competitive market.
• C) pay a higher wage to the labor purchased in the competitive market.
• D) not exercise any of its monopsony power.

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Definitions:

Third Party

An individual or entity that is involved in a transaction but is not one of the principal parties.

Recover Expenses

The act of obtaining reimbursement for costs that were incurred for a specific purpose or activity.

Implied Warranty

Is an assurance automatically applied by law, suggesting that a product is fit for its intended purpose and meets a basic level of quality.

Breach of Warranty

Violation of the terms of a warranty agreement, where the goods or services provided fail to meet the standards or conditions promised.