A monopsony will hire another worker if the
A) wage rate exceeds the value of marginal product.
B) marginal cost of labour is less than the value of marginal product.
C) marginal cost of labour is less than the wage rate.
D) marginal cost of labour exceeds the value of marginal product.

Question

Quizplus · Accepted Answer

In a monopsony, the employer will hire an additional worker if the marginal cost of labor (the additional cost of hiring one more worker) is less than the value of the marginal product (the additional revenue generated by that worker). This ensures that hiring the worker is profitable for the firm.

A Monopsony Will Hire Another Worker If the