In order to hire NM the firm only needs to offer a wage equal to WM. Even though the MFC or the added cost of the last worker was fairly high, the actual wage paid is much lower.

    Monopsonist hire fewer workers and at lower wages that if the same market were competitive in hiring. Notice that workers are paid a wage well below their MFC, thus allocative efficiency is lost by monopsony hiring.

Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved