Micro 5.4 - Monopsonistic Markets! What is a Monopsony and what do I need to know for exam day?

[@shouldertocryon-j2w]

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[@ReviewEcon]

You're very welcome! 😄

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[@ReviewEcon]

Thank you! Good luck with the rest of the school year and on the exams in may!

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[@ReviewEcon]

@alexdou-j8o good luck to you!! 😄

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I watched all of your detailed videos for unit 5 and the summary the day before the test while practicing mcqs and frqs and I got my highest grade to date (97%!!!) with little to no stress or confusion in the unit, will defo be using you for macro in the next semester, thank you so much for your dedication to teaching us economics!!!

[@ReviewEcon]

You're very welcome! I'm so happy to have helped! 😄

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lol I am watching this video 3 hours before my test.

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[@ReviewEcon]

Thank you very much for those kind words! Yes, I am a high school economics (and US history) teacher from Sacramento, CA.

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[@ReviewEcon]

You're too kind. Thank you! Good luck with your exams!

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Thank you! They're moving up slowly! 😀

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[@ReviewEcon]

Thank you! Good luck with your exams!

[@hadashahdecker1053]

have my unit test in 30 minutes, thank you so much

[@ReviewEcon]

You're very welcome! I hope that test went well!

[@hadashahdecker1053]

@@ReviewEcon MCQ went really well! we'll see about the FRQ haha

[@ReviewEcon]

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[@RLi-qp9wv]

If the supply curve of labour in a monopsony were to shift to the right, would the MRC curve shift too?

[@ReviewEcon]

Yes. Just like MR moves with a demand shift for a monopoly, MRC shifts with supply for a monopsony.

[@myplace571]

impact of minimum wage part, so when min Wage is applied, does the monopsony wage and quanity start at the supply curve? because on pervious graphs the Wm and Qm started from MRC=MRP

[@ReviewEcon]

An effective minimum wage will actually flatten the MRC (because each worker will now cost the minimum wage) until you reach the supply curve. When it reaches the supply curve, it shoots up vertically until it rejoins the original MRC curve. They will still hire at MRC=MRP. I hope that helps!

[@WijthaGayan]

perfectly under standard each concept thank you sir

[@ReviewEcon]

You're very welcome!

[@anniezhang347]

Question: what's the difference between the formula MRP = MR x MP and MRP = MP x P ?

[@ReviewEcon]

Technically, MP x P is the value of the marginal product (VMP) while MP x MR is MRP. When a firm sells in a perfectly competitive market VMP and MRP are the same since P=MR. But when a firm sells into an imperfectly competitive market, they are not equal. For the vast majority of past AP micro questions the firm is selling into a perfectly competitive market, so the distinction doesn't matter.

[@anniezhang347]

@@ReviewEcon so would it be correct to say MP x MR applies to imperfectly competitive markets (monopsonys), and both MP x MP and MP x P apply to perfectly competitive factor markets?

[@ReviewEcon]

Both can apply to either. It's not the market they are hiring labor in that matters, but the market they are selling their product into (perfect competition product market, monopoly, monopolistic competition, oligopoly).

[@myplace571]

i was trying to solve an exercise from khan academy on this lesson, i was asked to find marginal factor cost. i didnt really understand how to do it, any help please?

[@ReviewEcon]

Marginal factor cost (MFC) and marginal resource cost (MRC) are the same thing. For a perfectly competitive firm, it is the wage. For a monopsony, it is higher than the wage because the firm must increase the wage on all workers hired with each new worker. I hope that helps!

[@dennisdesanctis2567]

Different sports leauges and franchises are the examples I use in Monopsonies.....Just Saying

[@ReviewEcon]

Great examples!

[@sabotage956]

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[@ReviewEcon]

You're too kind. Thank you! Good luck with your exams!