A monopsonistic producer minimizes costs by choosing quantities of inputs such that:
A)marginal factor costs are equal.
B)input prices are equal.
C)marginal revenue product is minimized.
D)the quantity of each input is equal.

Question

Quizplus · Accepted Answer

A monopsonistic producer will choose quantities of inputs such that the marginal factor costs (MFC) are equal. This is because the MFC represents the cost of an additional unit of input, and the monopsonist will want to minimize these costs since they are the only buyer of the input in the market. By choosing the quantities of inputs that yield equal MFC, the monopsonist ensures that they are allocating their resources as efficiently as possible.

A Monopsonistic Producer Minimizes Costs by Choosing Quantities of Inputs