a worker's supply
curve can be either
upward sloping or
backward bending
in a perfectly
competitive labour
market, the MRP curve is
an employer's demand
curve for labour
in perfect competition,
the market supply of
labour is the sum of the
supply curves of labour
for ALL the workers in
the labour market
in perfect competition, the
market demand for labour is
the sum of the demand
curves for ALL the employers
in the labour market
in perfect competition, the
equilibrium wage is set where
market demand equals market
supply, and all the firms and
workers in the market are
passive price-takers at the
market-set wage
in both labour markets firms
employ workers up to the point
at which MRP = MC L
wage rate and level of employment are
lower in monopsony than for the whole
of a perfectly competitive labour
market
if a TU is formed in a previously perfectly
competitive labour market, any wage
increase it achieves is likely to REDUCE
demand for labour
in monopsony, a TU may
(within certain limits) be able
to increase BOTH wage and
employment level
similar results for introduction of national min. wage
wage discrimination takes place
when employers with monopsony
power pay different wage rates
based on workers' different
willingness to supply labour