A monopsonist's wage rate is
A)the same as marginal factor cost.
B)greater than marginal factor cost.
C)less than marginal factor cost.
D)the same as marginal revenue product.

Question

Quizplus · Accepted Answer

A monopsonist's wage rate is less than marginal factor cost, as the monopsonist has market power in the labor market and can lower the wage rate below the level that would be set in a competitive labor market. The monopsonist's wage rate may or may not be equal to its marginal revenue product, depending on the specific conditions of the market.

A Monopsonist's Wage Rate Is