Final answer:
Firms operating as a monopsony will hire fewer workers at a lower wage compared to firms in a perfectly competitive market. Monopsonies have the market power to influence wages, resulting in wages and employment levels lower than those in competitive markets.
Step-by-step explanation:
Compared to a firm hiring in a perfectly competitive market, firms operating as a monopsonistic market will hire fewer workers at a lower wage. In a perfectly competitive market, firms hire workers where the demand for labor equals the supply (D₁ = S₁), resulting in the employment of Lc workers at a wage of Wc. However, under monopsony conditions, employers have market power and can influence wages. They will hire up to the point where the marginal cost of labor equals their labor demand, which usually results in fewer workers (Lm) hired than in a competitive market (Lc) and at a lower wage (Wm).
A monopsony is characterized by being the sole employer in a labor market and thus can set wages lower than in a competitive labor market due to the lack of competition for workers. This leads to both a lower level of employment and a lower equilibrium wage when compared to the outcomes in a competitive labor market.