Economics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn

Exercise 5

Assume a monopsonistic empis paying a wage rate of W m and hiring Q m workers, as indicated in Figure 13.8. Now suppose an industrial union is formed that forces the empto accept a wage rate of W c. Explain verbally and graphically why in this instance the higher wage rate will be accompanied by an increase in the number of workers hired.