Under which of the following conditions will a monopsony hire an additional worker? When

Question

Quizplus · Accepted Answer

In a monopsony, the employer has market power, meaning it can influence the wage rate it pays to its workers. The employer is a price maker in the labor market. For an additional worker to be hired, the marginal cost of labor (MCL) must be less than the marginal revenue product of labor (MRP). This is because the MCL is the additional cost to the employer of hiring an additional worker, while the MRP is the additional revenue generated by the employer from hiring an additional worker.
Therefore, B is the correct choice as it states that MCL is less than MRP, indicating that it is profitable for the employer to hire an additional worker.

Under Which of the Following Conditions Will a Monopsony Hire