-In the above table, if the marginal revenue product is $18, how many workers will the profit maximizing monopsonist hire and what wage will they pay each worker?

Question

Quizplus · Accepted Answer

A profit-maximizing monopsonist hires workers up to the point where the marginal revenue product (MRP) equals the marginal factor cost (MFC). Without the table, we can't directly identify the MFC, but given the MRP of $18, the monopsonist would hire the number of workers at which the MRP is equal to or just exceeds the MFC. The wage paid by a monopsonist is typically less than the MRP at the margin because the monopsonist faces an upward-sloping supply curve of labor. Therefore, without specific data, the correct answer involves hiring workers up to the point where their contribution (MRP) is $18, and the wage paid would be lower than $18, aligning with how monopsonies operate by using their market power to pay less than the value of the marginal product.

-In the Above Table, If the Marginal Revenue Product Is