Question: Some persons argue that a monopsony firm exploits its workers if it pays them less than their marginal revenue products. Others disagree. They say that,
Some persons argue that a monopsony firm exploits its workers if it pays them less than their marginal revenue products. Others disagree. They say that, as long as the firm pays the workers their opportunity costs (which must be the case, or else the workers would not stay with the firm), the workers are not being exploited. This view suggests that there are two definitions of exploitation: (a) Paying workers below their marginal revenue products (even if wages equal the workers’ opportunity costs) (b) Paying workers below their opportunity costs. Keeping in mind that your answermay be a subjective judgment, which definition of exploitation do you think is more descriptive of the process and why?
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