Which of the following is true for a firm that is an input market monopsony?
A)In order to increase employment of the input,the firm must lower the wage rate.
B)The price that the monopsonist pays for the input is determined by the height of the input demand curve.
C)The marginal cost of the input exceeds the average cost of the input.
D)The wage paid will equal the marginal cost of the labor input.

Question

Quizplus · Accepted Answer

In a monopsony, the firm has significant control over the market for an input, such as labor. As it increases the quantity of the input it buys, it must offer a higher price to attract additional units. This means the marginal cost (the cost of acquiring one more unit of the input) is higher than the average cost (the total cost divided by the number of units purchased), which is characteristic of monopsonistic markets.

Which of the Following Is True for a Firm That