If the marginal factor cost is less than labor demand,a monopsonist should
A)Reduce the wage rate.
B)Hire additional workers.
C)Increase the wage rate.
D)Hire fewer workers.

Question

Quizplus · Accepted Answer

When the marginal factor cost (MFC) is less than the labor demand, it means that the cost of hiring an additional worker is less than the value that worker adds. Therefore, a monopsonist should hire additional workers to increase profit.

If the Marginal Factor Cost Is Less Than Labor Demand,a