The figure given below represents equilibrium in the labor market with the demand and supply curves of labor.Figure 14.6
In the figure,
D = MRP implies demand for labor = Marginal Revenue Product
MFC represents Marginal Factor Cost curve
S represents the supply curve of labor

-Refer to Figure 14.6. Calculate the quantity of labor hired by a monopsonist.
A)125 laborers
B)75 laborers
C)25 laborers
D)250 laborers
E)50 laborers

Question

The figure given below represents equilibrium in the labor market with the demand and supply curves of labor.Figure 14.6
In the figure,
D = MRP implies demand for labor = Marginal Revenue Product
MFC represents Marginal Factor Cost curve
S represents the supply curve of labor
 
-Refer to Figure 14.6. Calculate the quantity of labor hired by a monopsonist.
A)125 laborers 
B)75 laborers 
C)25 laborers 
D)250 laborers 
E)50 laborers

Quizplus · Accepted Answer

The monopsonist will hire the quantity of labor where the MFC equals the MRP. This occurs at point E where the quantity of labor is 75. Thus, the answer is B.

The Figure Given Below Represents Equilibrium in the Labor Market