If a monopsonist is hiring factors, it will choose to hire that quantity of labor at which __________ and pay a wage rate that is __________.
A)MR = MC; equal to labor's MRP
B)the supply curve of labor intersects the demand curve for labor; equal to labor's MRP
C)MRP = MFC; equal to labor's MRP
D)MRP = MFC; less than labor's MRP
E)the supply curve of labor intersects the demand curve for labor; less than MFC

Question

Quizplus · Accepted Answer

A monopsonist will hire labor up to the point where the marginal revenue product (MRP) equals the marginal factor cost (MFC), but due to its market power, it will pay a wage that is less than the labor's MRP.

If a Monopsonist Is Hiring Factors, It Will Choose to Hire