Total labor cost would be the orange shaded area and labor's contribution to profit would be the green shaded area. The firm would hire as many workers as a competitive firm but only the last worker hired would receive a wage equal to the competitive wage. This is far more profitable than a simple monopsony and is may be one reason many firms try to keep wages and salaries secret. Note also that there is no lost surplus.
Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved