A monopsonist faces an upward-sloping labor supply curve.This means that his marginal expenditures on labor are
A) greater than the wage.
B) equal to the wage plus the increase in the wage resulting from hiring one more unit of labor hired.
C) greater than the wage because hiring more workers requires to pay all workers more.
D) All of the above.

Question

Quizplus · Accepted Answer

A monopsonist, being the sole buyer of labor in a market, faces an upward-sloping labor supply curve. This means that to attract additional workers, the monopsonist must increase the wage rate. This increase applies not just to the additional worker(s) but to all workers already employed, making the marginal expenditure on labor (the additional cost of hiring one more worker) greater than the wage of the additional worker alone. This encompasses the wage increase for the additional worker (A), the wage plus the increase due to hiring one more worker (B), and the fact that hiring more workers requires paying all workers more (C).

A Monopsonist Faces an Upward-Sloping Labor Supply Curve