An output market monopoly:
A)pays a wage that is greater than marginal value product of labor.
B)employs fewer workers than would be employed under competition.
C)pays a wage greater than the marginal cost of labor.
D)has an labor demand curve that lies above the marginal value product curve of labor.

Question

Quizplus · Accepted Answer

An output market monopoly has the ability to control the price of its product because there are no close substitutes available in the market. This leads to a downward sloping demand curve for its product. As a result, the monopoly will produce a lower output quantity at a higher price than would be produced under competition. This lower output quantity will require fewer workers than would be required under competition, resulting in a lower employment level. Therefore, option B is correct as it states that an output market monopoly employs fewer workers than would be employed under competition.

An Output Market Monopoly