The following figure shows the marginal cost [MC],average cost [AC],and demand [D] curves for a monopsonist in the labor market.
Figure 16-2
-Refer to Figure 16-2.When the monopsonist is in equilibrium,the level of labor employed is _____.
A)A
B)B
C)C

Question

The following figure shows the marginal cost [MC],average cost [AC],and demand [D] curves for a monopsonist in the labor market.
Figure 16-2 
-Refer to Figure 16-2.When the monopsonist is in equilibrium,the level of labor employed is _____.
A)A 
B)B 
C)C

Quizplus · Accepted Answer

The monopsonist will employ labor at the point where the marginal cost (MC) intersects with the demand (D) curve, which is point C. At this point, the monopsonist will hire Q units of labor at a wage rate of W, resulting in an average cost (AC) of AC1. At any other level of employment, the marginal cost of hiring an additional worker would either be higher than the marginal revenue product (resulting in a loss) or lower, which would mean the monopsonist could increase profits by hiring more workers. Therefore, the level of labor employed will be Q at point C on the MC and demand curves.

The Following Figure Shows the Marginal Cost [MC],average Cost [AC],and