The following diagram shows marginal value and expenditure curves for a monopsony. In moving from the competitive price and quantity to the monopsony price and quantity, the deadweight loss from monopsony power is the area:

Question

Quizplus · Accepted Answer

The deadweight loss from a monopsony is the loss of economic efficiency that occurs when a firm with monopsony power restricts its hiring to a level below that which would prevail in a competitive labor market. In this case, the deadweight loss is represented by the triangle formed by the points F, D, and G. Therefore, the best choice is D.

The Following Diagram Shows Marginal Value and Expenditure Curves for a Monopsony