-The Above Figure Illustrates the Case of a Monopsony in the Labor

Multiple Choice

-The above figure illustrates the case of a monopsony in the labor market. If the current wage paid is W₁ and new wage legislation is passed that increases the minimum wage in this market to W₂, the firm will

A) hire less labor at the higher wage and, according to the law of demand, moving from point D to B.
B) hire the same amount of labor as before the law was passed because it cannot adjust to wage changes.
C) hire more labor, moving from point C to B.
D) pay a higher wage, moving from point C to A.