-In the above table, if the marginal revenue product is $22, how many workers will the profit maximizing monopsonist hire and what wage will they pay each worker?

Question

Quizplus · Accepted Answer

In a monopsony, the profit-maximizing number of workers is determined where the marginal revenue product (MRP) equals the marginal expense (ME) of hiring an additional worker, not the wage rate. If the MRP is $22, the firm will hire workers up to the point where the additional cost of hiring one more worker equals $22. Without the table, we can't directly match this to the number of workers and their wage, but typically, the wage paid per worker is less than the MRP at the profit-maximizing quantity of labor. The correct answer, therefore, involves hiring workers up to the point where their contribution equals $22, and the wage paid is typically lower than this MRP to ensure profit maximization for the monopsonist.

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