The wage rate that a monopsonist would find most profitable is the wage

Question

Quizplus · Accepted Answer

The wage rate that a monopsonist would find most profitable is at the level of employment where the marginal factor cost of labor intersects with the labor demand curve. This is because at this point the monopsonist is able to hire the optimal amount of labor at the lowest possible cost. Any increase in wages beyond this point would result in a loss of profits for the monopsonist. On the other hand, if wages were set too low, laborers would not be motivated to work for the monopsonist. Therefore, the optimal wage rate is found at the intersection of the marginal factor cost of labor and the labor demand curve. Option B is the only option that reflects this explanation.

The Wage Rate That a Monopsonist Would Find Most Profitable