The following figures show the demand and supply of labor in two different types of labor market. Figure 15.5 In the figures,
D: Demand curve for labor
S: Supply curve of labor
MRP: Marginal revenue product
MFC: Marginal factor cost
-The Market B described in Figure 15.5 is a(n):

Question

The following figures show the demand and supply of labor in two different types of labor market. Figure 15.5  In the figures,
D: Demand curve for labor
S: Supply curve of labor
MRP: Marginal revenue product
MFC: Marginal factor cost
-The Market B described in Figure 15.5 is a(n):

Quizplus · Accepted Answer

Market B is a monopsonistic labor market because there is only one buyer of labor, and they have the power to influence the wage rate. This can be seen from the fact that MFC is greater than the supply of labor at all levels of employment, indicating that the firm has to pay a higher wage rate to attract more workers. In a perfectly competitive market, the wage rate would be determined by the intersection of the demand and supply curves, and the price would be equal to the marginal revenue product. A monopolist or oligopolistic market would have a single or a few dominant buyers in the market, but they would still face a relatively elastic supply of labor. A monopolistically competitive market would have several buyers of labor offering slightly different wage rates, leading to some degree of competition among employers.

The Following Figures Show the Demand and Supply of Labor