The Marginal resource Cost curve for a monopsonist lies above his supply curve; thus, the cost-minimizing/profit-maximizing wage rate will always be lower than that of both a Monopolist union’s equilibrium price and that of the market equilibrium price. As a result, a monopolist union (supplier of labor) will fix its own supply curve so that it imposes an equilibrium wage rate of say $20 per hour, whereas monopsonist’s equilibrium wage rate is say $15 per hour. Why is such a situation termed as a Bilateral Monopoly?
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