A monopsony will:

Question

A monopsony will:

Quizplus · Accepted Answer

A monopsony is a market situation where there is only one buyer of a particular good or service, in this case, labor. The monopsonistic employer can hire more workers at a lower wage than a competitive employer, but chooses not to do so because it incurs a higher marginal factor cost. In order to find the optimal quantity of labor to hire, the monopsonistic employer employs a quantity of labor where the marginal revenue product (MRP) equals the marginal factor cost (MFC), which is usually higher than the wage rate. Therefore, the best choice is C: employ a quantity of labor where the MRP equals the MFC.

A Monopsony Will