A profit-maximizing monopsonist will hire workers at the point where the marginal factor cost curve intersects the
A)Marginal wage curve.
B)Labor supply curve.
C)Equilibrium wage.
D)Marginal revenue product curve.

Question

Quizplus · Accepted Answer

A profit-maximizing monopsonist will hire workers at the point where the marginal factor cost (MFC) curve intersects the marginal revenue product (MRP) curve. The MRP curve represents the additional revenue earned by the firm by hiring an additional worker, while the MFC curve represents the additional cost incurred by the firm in hiring an additional worker. Therefore, the profit-maximizing monopsonist will hire workers up to the point where MRP = MFC, which is the intersection of the two curves.

A Profit-Maximizing Monopsonist Will Hire Workers at the Point Where