A profit-maximizing monopsonist will hire the quantity of labor where
A)MRP equals the wage rate.
B)MRP equals zero.
C)MRP equals MFC.
D)Labor supply equals labor demand.

Question

Quizplus · Accepted Answer

A profit-maximizing monopsonist hires the quantity of labor where the marginal revenue product (MRP) equals the marginal factor cost (MFC), not merely where MRP equals the wage rate or where labor supply equals labor demand, as those conditions describe perfectly competitive labor markets, not monopsony conditions.

A Profit-Maximizing Monopsonist Will Hire the Quantity of Labor Where