Refer to the above graph.The producer illustrated:

Question

Quizplus · Accepted Answer

The graph shows that the producer must pay the market wage rate, W*, for every unit of labor hired. This indicates that the producer is hiring labor in a competitive market, and does not have control over the wage rate. Therefore, Choice D is the correct answer. Choice A is incorrect because a monopsonist would have some control over the wage rate, but the graph shows that the producer pays the market wage rate. Choice B is incorrect because the producer is not a pure competitor in the output market - it has some control over the price it receives for its output. Choice C is also incorrect for the same reason - the producer does not have control over the market wage rate.

Refer to the Above Graph.The Producer Illustrated