Firm K is operating in a competitive market, while Firm L is a monopsony employer. Each firm is producing at equilibrium output. If trade unions are introduced and this leads to higher wages in both firms, what effect is most likely to occur for each firm when trade unions enter the labour market?
- Afirm K: employment will decrease; firm L: employment will decrease
- Bfirm K: employment will decrease; firm L: employment will increase
- Cfirm K: employment will increase; firm L: employment will decrease
- Dfirm K: employment will increase; firm L: employment will increase