Imperfectly competitive labour markets

Question 1

What is a monopsony

Answer 1

One buyer of labour in a market

Question 2

Why is the MCL curve higher than the ACL curve in a monopsony?

Answer 2

Each time a worker is hired, not only does the firm have to pay a higher wage to attract an additional worker, but also has to increase existing workers wages by the same amount

Question 3

How does imperfect information lead to imperfections?

Answer 3

1) employees don’t know about job opportunities which leads to labour immobility, workers in low productivity jobs, or unemployment

2)employers cannot determine MRP which leads to adverse selection, higher recruitment costs, discrimination

Question 4

What is occupational immobility?

Answer 4

the difficulty workers face in moving from one type of job to another, often due to factors like lack of transferable skills or insufficient training.

Question 5

What is geographical immobility?

Answer 5

the difficulty workers face in moving from one location to another to find work. This can be due to financial constraints/housing or family ties