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Unformatted text preview: 1 , the perfectly competitive firm would face a market wage of $25 because that is the wage rate corresponding to the intersection of the market demand and supply curves. If the perfectly competitive firm had the same marginal revenue product as the monopsonist, the perfectly competitive firm would equate marginal revenue product with the market wage and choose to hire 4 workers at $25. The monopsonist's decision to hire only 3 workers at a wage of $20 makes it clear that monopsony, like monopoly in a product market, reduces society's welfare....
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- Fall '10