If the factor supply curve facing a monopolist is the market supply curve, and if the market supply curve is an upward sloping straight line, the marginal expenditure curve:
A) lies below the market supply curve.
B) lies above the market supply curve.
C) is the market supply curve.
D) crosses the market supply curve at the market wage rate.
E) Either A or B is possible.

Question

Quizplus · Accepted Answer

The marginal expenditure curve lies above the market supply curve because, with an upward sloping supply curve, each additional unit of input costs more than the previous one, leading to a higher marginal expenditure for each additional unit purchased.

If the Factor Supply Curve Facing a Monopolist Is the Market