Multiple Choice
Which of the following is not true about a monopsonist's rule to choose the profit-maximizing wage-employment combination?
A) It is the same as in perfectly competitive labor markets, that is, it hires until MRP = MLC.
B) It results in workers not getting paid their marginal revenue product.
C) It generates a return to monopsony power.
D) It is consistent with the ethics underlying wage determination in a perfectly competitive labor market, that is W = MRP.
E) It equates the marginal cost of labor to its marginal revenue product.
Correct Answer:
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