The figure given below represents equilibrium in the labor market with the demand and supply curves of labor. Figure 14.6 In the figure,
D = MRP implies demand for labor = Marginal Revenue Product
MFC represents Marginal Factor Cost curve
S represents the supply curve of labor
According to Figure 14.6,what is the wage paid by a monopsonist?
A)$10
B)$23
C)$20
D)$12
E)$15

Question

The figure given below represents equilibrium in the labor market with the demand and supply curves of labor. Figure 14.6  In the figure,
D = MRP implies demand for labor = Marginal Revenue Product
MFC represents Marginal Factor Cost curve
S represents the supply curve of labor
According to Figure 14.6,what is the wage paid by a monopsonist?
A)$10 
B)$23 
C)$20 
D)$12 
E)$15

Quizplus · Accepted Answer

In a monopsony, the wage rate is determined by the intersection of the MFC curve and the supply curve of labor (S). In this figure, the MFC curve intersects the supply curve at point E, which corresponds to a wage rate of $12. Therefore, the monopsonist pays a wage of $12.

The Figure Given Below Represents Equilibrium in the Labor Market