For a monopsonist in the labor market, the marginal resource cost of labor is
A) higher than the wage rate or price of labor.
B) less than the wage rate or price of labor.
C) equal to the wage rate or price of labor.
D) inversely related to the wage rate or price of labor.

Question

Quizplus · Accepted Answer

In a monopsony, the firm is the sole buyer of labor, so it must increase wages to attract additional workers. This means the marginal resource cost (MRC) of hiring an additional worker is higher than the wage rate, as it includes the higher wages paid to all workers.

For a Monopsonist in the Labor Market, the Marginal Resource