Heya can you draw me the diagram for the nmw and monospony power. Im conufsed with Nmw is below the compeititvelevel but above monospony where how do i find the quanitiy demanded is it when D=AC or when the wae rate and demand curve meet?


Unfortunately I don't have time to draw a new diagram, but lets have a look at this monopsony diagram

Diagram of monopsony

The competitive wage is at W1,

The monopsony maximises profits where MR = MC. therefore can pay a wage of W2.

If there is a minimum wage between W1 and W2. The quantity employed will be where the NMW line meets the Supply curve. Basically, in this case a wage above W1, but below W2, should in theory increase the quantity of workers.

Labour Market Imperfections

Labels: labour markets