For the monopsonist,marginal expenditure is greater than the wage rate because the monopsonist
A) pays a wage higher than that paid in a competitive market.
B) chooses the perfectly competitive quantity of labor.
C) must increase the wage to all units of labor to attract more units of labor.
D) must take the wage as given by the market.

Question

Quizplus · Accepted Answer

A monopsonist must increase the wage rate for all units of labor to attract additional units of labor, which means the marginal expenditure (the additional cost of hiring one more unit of labor) is greater than the wage rate paid to the newly hired labor because it includes the increased wages for all previously hired workers as well.

For the Monopsonist,marginal Expenditure Is Greater Than the Wage Rate