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
Refer to Figure 14.6.Calculate the quantity of labor hired by a monopsonist.
A)125 laborers
B)75 laborers
C)25 laborers
D)250 laborers
E)50 laborers

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
Refer to Figure 14.6.Calculate the quantity of labor hired by a monopsonist.
A)125 laborers 
B)75 laborers 
C)25 laborers 
D)250 laborers 
E)50 laborers

Quizplus · Accepted Answer

The monopsonist will hire labor up to the point where MFC = MRP. From the figure, we can see that MRP intersects with MFC at a quantity of 75 laborers hired. Thus, the answer is B, 75 laborers.

The Figure Given Below Represents Equilibrium in the Labor Market