Suppose a monopsonist must pay $10 per hour to attract 10 workers.If the same monopsonist must raise its wage to $11 per hour to attract the 11^th worker,what is its marginal factor cost for labor?

Question

Quizplus · Accepted Answer

The marginal factor cost is the additional cost of hiring one more worker. To hire the 11th worker, the monopsonist must pay $11 per hour to all 11 workers, which totals $121. Previously, it paid $10 per hour to 10 workers, totaling $100. The marginal factor cost is $121 - $100 = $21 per hour.

Suppose a Monopsonist Must Pay $10 Per Hour to Attract