A monopsonist's marginal wage cost curve is positively sloped because:
A)it "discriminates" by paying each worker a different wage according to his or her opportunity cost
B)it must charge a lower price for each additional unit of output,and it must charge this lower price for all units sold
C)it pays its workers lower wages,so that the supply of labor to the market is restricted
D)it must pay a higher wage to attract additional workers and it must pay this higher wage to all workers

Question

Quizplus · Accepted Answer

A monopsonist is the only buyer in the labor market, so it has market power to set the wage rate. If it wants to hire more workers, it must offer a higher wage to attract them, which increases the marginal wage cost. This higher wage must also be paid to all other workers already employed, so the marginal wage cost curve is positively sloped.

A Monopsonist's Marginal Wage Cost Curve Is Positively Sloped Because