Economics 9708 · AS & A Level · Long-run costs and economies of scale

Long-run costs and economies of scale — practice question

The diagram illustrates the situation when the workers of a profit-maximising monopsonist employer join a trade union and manage to negotiate a wage rate of OWT. What effect does this new wage rate have on employment?

AIt falls from OQ2 to OQ1.
BIt falls from OQ2 to OQ3.
CIt rises from OQ1 to OQ3.
DIt rises from OQ1 to OQ4.

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