The optimal level of employment for a monopsonist is set at the point where the
A)wage rate equals the VMPL.
B)wage rate equals the marginal factor cost.
C)marginal factor cost equal to the MRPL.
D)supply of labor equals the marginal factor cost.

Question

Quizplus · Accepted Answer

The optimal level of employment for a monopsonist is set at the point where the marginal factor cost (MFC) equals the marginal revenue product of labor (MRPL). This ensures the monopsonist is maximizing profit by equating the additional cost of hiring one more worker to the additional revenue generated by that worker.

The Optimal Level of Employment for a Monopsonist Is Set