For a monopsonist in a labour market,the firm's MC curve for labour lies ________ the competitive supply curve for labour; just as the marginal revenue curve for a monopolist lies ________ the demand curve for its product.

Question

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In a monopsonistic labour market, a single firm has market power and can negotiate wages below the competitive equilibrium level. As a result, the firm's marginal cost (MC) curve for hiring labour lies above the supply curve for labour, indicating that the firm must pay a higher wage to attract more workers. Therefore, option D, "above; below," correctly describes the relationship between the firm's MC curve for labour and the competitive supply of labour. Similarly, in a monopolistic market, the firm's marginal revenue (MR) curve lies below the demand curve for its product, indicating that the firm must decrease its price to sell more units. Therefore, option D also correctly describes the relationship between the MR curve and the demand curve.

For a Monopsonist in a Labour Market,the Firm's MC Curve