Use the following to answer question(s): Minimum Wage and Monopsony

-(Exhibit: Minimum Wage and Monopsony) In the absence of a minimum wage, the monopsony firm in the exhibit would maximize profits by hiring _______ units of labor per period.

Question

Use the following to answer question(s): Minimum Wage and Monopsony
 
-(Exhibit: Minimum Wage and Monopsony) In the absence of a minimum wage, the monopsony firm in the exhibit would maximize profits by hiring _______ units of labor per period.

Quizplus · Accepted Answer

In a monopsony, a single buyer (employer) in the labor market maximizes profits by equating marginal revenue product (MRP) with marginal factor cost (MFC). The profit-maximizing quantity of labor is where the MFC curve intersects the MRP curve, which is indicated by L₁ in typical diagrams.

Use the Following to Answer Question(s): Minimum Wage and Monopsony