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

Exercise 4

Suppose the formerly competing firms in question 3 form an empassociation that hires labor as a monopsonist would. Describe verbally the effect on wage rates and empAdjust the graph you drew for question 3, showing the monopsonistic wage rate and emplevel as W 2 and Q 2 , respectively. Using this monopsony model, explain why hospital administrators sometimes complain about a "shortage" of nurses. How might such a shortage be corrected?