Refer to the above graph.If the MRC increased:
A) quantity would increase.
B) quantity would decrease.
C) the firm would operate as a monopsonist.
D) the firm would increase the supply of labor.

Question

Refer to the above graph.If the MRC increased:
A) quantity would increase. 
B) quantity would decrease. 
C) the firm would operate as a monopsonist. 
D) the firm would increase the supply of labor.

Quizplus · Accepted Answer

When the marginal resource cost (MRC) increases, it becomes more expensive for the firm to hire additional workers. Therefore, the firm will reduce its demand for labor, leading to a decrease in the equilibrium quantity of labor hired (Q*).

Refer to the Above Graph.If the MRC Increased