The supply of labour to a monopsonistic firm is w = 10 + z, where w is the wage rate and z is quantity of labour. The firm's MRP = 70 - z. The firm employs only labour and a minimum wage is imposed on the firm. Relative to the initial monopsony equilibrium, the minimum wage will induce the firm to increase employment if the minimum wage is:

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In a monopsony, the firm is the sole buyer of labor and faces an upward-sloping labor supply curve. The firm maximizes profit where its marginal expenditure on labor (ME) equals the marginal revenue product of labor (MRP). The supply equation is w = 10 + z, which means the wage rate increases with the quantity of labor. The MRP is given as 70 - z. To find the initial equilibrium without a minimum wage, set ME equal to MRP. However, without the explicit ME function, we focus on the impact of a minimum wage. A minimum wage effective in increasing employment must be set between the original equilibrium wage and the wage at which the MRP equals the minimum wage. Since the MRP at which the firm would voluntarily hire workers is 70 - z, a minimum wage that is effective in increasing employment must make it profitable for the firm to hire more workers than at the monopsony equilibrium but not so high that it exceeds the MRP of the last worker hired. Thus, it must be higher than the initial equilibrium wage but lower than the maximum wage the firm would pay for the last unit of labor it hires (which is when MRP equals the wage). Without calculating the exact equilibrium, the correct option is the one that suggests the minimum wage is set above the monopsony wage but below the wage at which the firm's demand for labor would start to decrease, which is "larger than $30, but less than $50." This range is plausible because it is above the base wage of $10 plus additional labor costs that would be considered too low (options A and C) and below the maximum MRP of $70, ensuring the firm is still willing to hire additional labor within this wage range.

The Supply of Labour to a Monopsonistic Firm Is W