For a monopsony buyer of an input, the marginal expenditure curve:
A) lies above the average expenditure curve.
B) lies below the average expenditure curve.
C) is identical to the average expenditure curve.
D) lies below the input demand curve.

Question

Quizplus · Accepted Answer

In a monopsony, the marginal expenditure curve lies above the average expenditure curve because the monopsonist must pay a higher price for each additional unit of input, causing the marginal expenditure to rise faster than the average expenditure.

For a Monopsony Buyer of an Input, the Marginal Expenditure