Use the following to answer question(s): Monopsony

-(Exhibit: Monopsony) Given monopsony in the factor market, the equilibrium wage and quantity of labor would be:

Question

Use the following to answer question(s): Monopsony
 
-(Exhibit: Monopsony) Given monopsony in the factor market, the equilibrium wage and quantity of labor would be:

Quizplus · Accepted Answer

In a monopsony, the employer has market power and can influence the wage rate. The equilibrium wage will be lower than in a perfectly competitive market, and the quantity of labor hired will be less than the optimal level for society as a whole. In Exhibit Monopsony, the intersection of Marginal Revenue Product (MRP) and Marginal Factor Cost (MFC) occurs at point E₂, which determines the wage rate (W₂) and the quantity of labor hired (L₁). Therefore, the correct answer is B, W₂; L₁.

Use the Following to Answer Question(s): Monopsony