The marginal factor cost of labor for a monopsonist is
A)equal to the wage rate because if the monopsonist wants to hire another worker, it can do so at the old wage rate.
B)less than the wage rate because if the monopsonist wants to hire another worker, it has to raise the wage rate paid to all workers.
C)less than the wage rate because if the monopsonist wants to hire another worker, it has to lower the wage rate paid to all workers.
D)greater than the wage rate because if the monopsonist wants to hire another worker, it has to raise the wage rate paid to all workers.

Question

Quizplus · Accepted Answer

The marginal factor cost of labor for a monopsonist is greater than the wage rate because if the monopsonist wants to hire an additional worker, it must increase the wage rate for all workers, not just the new one. This makes the cost of hiring an additional worker higher than just the wage rate paid to that worker.

The Marginal Factor Cost of Labor for a Monopsonist Is