The following figure represents the equilibrium in the labor market.Figure 14.4
In the figure,
MFC: Marginal Factor Cost curve
D: Demand or the Marginal Revenue Product curve
S: Supply curve
-A monopolist hiring labor in a perfectly competitive resource market is faced with a:
A)perfectly elastic demand curve for labor.
B)horizontal marginal factor cost curve.
C)perfectly inelastic demand curve for labor.
D)vertical supply curve of labor.
E)positively sloped marginal factor cost curve.

Question

The following figure represents the equilibrium in the labor market.Figure 14.4
  In the figure,
MFC: Marginal Factor Cost curve
D: Demand or the Marginal Revenue Product curve
S: Supply curve
-A monopolist hiring labor in a perfectly competitive resource market is faced with a:
A)perfectly elastic demand curve for labor. 
B)horizontal marginal factor cost curve. 
C)perfectly inelastic demand curve for labor. 
D)vertical supply curve of labor. 
E)positively sloped marginal factor cost curve.

Quizplus · Accepted Answer

A monopolist hiring labor in a perfectly competitive resource market is faced with a horizontal marginal factor cost curve. This is because the monopolist can hire as much labor as it wants at the going market wage, so the marginal cost of labor is constant.

The Following Figure Represents the Equilibrium in the Labor Market