From the diagram, ARPL is the average revenue product curve of labour for a profit-maximising monopsonist, and MRPL is the marginal revenue product of labour curve. AFCL and MFCL are the firm’s average and marginal factor cost curves. What is a likely result if a trade union negotiated a wage that was different from the original market wage?
- Aoriginal market wage W1; possible range W1–W2; effect on employment increase
- Boriginal market wage W1; possible range W2–W3; effect on employment increase
- Coriginal market wage W2; possible range W2–W3; effect on employment decrease
- Doriginal market wage W3; possible range W1–W3; effect on employment decrease