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joshman171 joshman171
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6 years ago
A nurse wishes to get a job in a large city with many hospitals from which to choose but is dismayed to learn that the wages for nurses are nearly as low in the city as in the rural area where the nurse lives. The nurse concludes that
 
  a. city hospitals have agreed on wage levels for nurses.
  b. demand for nurses in the city is similar to the rural area.
  c. state government has mandated wage scales for nurses.
  d. the cost of living in the city is similar to the rural area.
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wrote...
6 years ago
A
The situation of low wages and a nursing shortage is an economic contradiction. The model of monopsony describes a situation in which a market containing few hospitals will set a nurse's wage according to the returns that the nurse brings to the organization; hence, in that organization, wages stay low despite a nursing shortage. In markets with more opportunities for nurses, wages are more competitive. In this situation, the nurse concludes that the city hospitals have created an artificial monopsony model by banding together to set wages for nurses contrary to market principles.
The relative demand might be the same, but the sheer number of hospitals in a city compared with a rural area would mean that there were more organizations competing for nurses, leading to higher wages.
Although it is possible for a state government to mandate wage scales for nurses, it is not probable.
Costs of living in the city and rural area might be comparable, but the larger number of hospitals in the city should equate to higher demand and therefore higher wages for nurses.
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