Suppose your firm is a monopsonist hiring only one variable input. If you want to maximize profits, you will purchase that variable input up to the point where the

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As a monopsonist, the firm faces an upward sloping supply curve of labor and must pay a higher wage to hire more units of labor. In order to maximize profits, the firm should hire labor up to the point where the MRP (marginal revenue product) curve intersects the marginal cost curve of labor. This is where the additional revenue generated from hiring one more unit of labor equals the additional cost of hiring that unit of labor, thus maximizing profits.

Suppose Your Firm Is a Monopsonist Hiring Only One Variable