Which of the following is TRUE concerning equilibrium in a monopsonistic factor market?
A) The firm uses the efficient level of the input but does not maximize profit.
B) The firm maximizes profit but does not use the efficient level of the input.
C) The firm maximizes profit and uses the efficient level of the input.
D) The firm either maximizes profit or uses the efficient level of the input, but it cannot do both at the same time.

Question

Quizplus · Accepted Answer

In a monopsonistic factor market, the firm maximizes its profit by employing a level of input where the marginal factor cost equals the marginal revenue product. However, this does not correspond to the efficient level of input use, where the price of the input equals its marginal revenue product.

Which of the Following Is TRUE Concerning Equilibrium in a Monopsonistic