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 outcome when the employees of a profit-maximising monopsonist employer set up a trade union and successfully secure a wage rate of OWT through negotiation. 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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