In a monopsonistic input market the marginal cost of another unit of an input is greater than its price because it is assumed that the firm has to pay a higher price to get an additional unit of input per time period.

Question

Quizplus · Accepted Answer

In a monopsonistic input market, the firm's demand curve for the input is upward-sloping, meaning that the price it has to pay for an additional unit of input increases as it purchases more. This results in the marginal cost of another unit of input being greater than its price.

In a Monopsonistic Input Market the Marginal Cost of Another