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    Monopolies and minimum wages

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    Using an appropriate diagram, show and explain briefly how a rise in the minimum wage could result in higher employment in a monopolistic labor market. Could a similar increase in employment accompany the rise in the minimum wage if the labor market is not monopolistic? Explain your reasoning.

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    See the attached file. Because the monopolist's marginal cost curve is above the supply curve, it can lower costs by offering W1. If a minimum wage W2 were ...

    Solution Summary

    Minimum wages and employment level in monopolistic markets.