Answer to Question #99182 in Macroeconomics for annie

Question

In which case we can say that a monopsonistic employer is discriminating among its workers?

Answer 1

Because the monopsonist is the only employer in the industry, if it wishes to employ more labour it must raise the marginal wage to attract new workers into the industry. The supply curve of labour is not the same as the marginal costs of labour because, as the only employer, the monopsonist must pay all existing workers the same rate as the new workers. Hence, when attracting new workers, the marginal cost of labour is greater than the existing average cost of labour.