A monopolist's short run labor demand curve
A) is always equal to the firm's long run labor demand curve.
B) is above the marginal product of labor curve.
C) is below the marginal product of labor curve.
D) equals the marginal product of labor curve.
E) is always half the firm's long run labor demand curve.

Question

Quizplus · Accepted Answer

In the short run, a monopolist's labor demand curve is below the marginal product of labor curve. This is because the monopolist has some degree of market power and can set the price of its product above marginal cost, which reduces the quantity demanded and thus the marginal product of labor. As a result, the monopolist will hire less labor than it would in a perfectly competitive market.

A Monopolist's Short Run Labor Demand Curve