Suppose your firm is a monopsonist hiring only one variable input.If you want to maximize profits,you will purchase that variable input up to the point where the

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Monopsonists have the power to influence the wage rate for the input they hire. To maximize profits, they choose the quantity of input that equates the marginal revenue product (MRP) of the input to the marginal cost (MC) of hiring that input. Hence, the monopsonist's profit-maximizing input quantity is where the MRP curve for the input intersects the MC curve. In other words, the monopsonist should hire the input up to the point where the additional revenue generated by an additional unit of input is equal to the additional cost incurred for hiring that unit.

Suppose Your Firm Is a Monopsonist Hiring Only One Variable