Microeconomics 18th Edition by Campbell McConnell, Stanley Brue, Sean Flynn

Exercise 4

Suppose that the formerly competing firms in question 3 form an employers' association that hires labor as a monopsonist would. Describe verbally the effect on wage rates and employment. Adjust the graph you drew for question 3, showing the monopsonistic wage rate and employment level as W 2 and Q₂ , respectively. Using this monopsony model, explain why hospital administrators frequently complain about a "shortage" of nurses. How might such a shortage be corrected