At the profit maximizing level of employment for a monopsonist:
A)the wage exceeds the marginal wage cost
B)marginal revenue product equals the wage
C)the wage is less than marginal wage cost
D)marginal product equals marginal revenue product

Question

Quizplus · Accepted Answer

A monopsonist faces an upward-sloping labor supply curve, meaning they must pay higher wages to attract more workers. Therefore, the marginal wage cost (the cost of hiring an additional worker) is higher than the wage paid to the worker, making the wage less than the marginal wage cost.

At the Profit Maximizing Level of Employment for a Monopsonist