For a monopsony buyer of labor,the marginal cost of hiring one more worker is:
A)equal to the wage rate.
B)less than the wage rate.
C)greater than the wage rate.
D)the same as the average cost.

Question

Quizplus · Accepted Answer

In a monopsony, where there is only one buyer (employer) in the labor market, the marginal cost of hiring an additional worker is greater than the wage rate. This is because the monopsonist must increase the wage rate for all workers to attract one more worker, thus increasing the total cost more than the wage of the additional worker.

For a Monopsony Buyer of Labor,the Marginal Cost of Hiring