Question

Question 14 For a monopsonist, the marginal factor cost is always: equal to the wage rate....

Question 14

For a monopsonist, the marginal factor cost is always:

equal to the wage rate.

less than the wage rate.

greater than the wage rate

the same as the labor supply.

the same as the labor demand.

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Question 17

A monopsonist will hire more workers than will be hired in a competitive labor market.

True

False

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Question 19 Which of the following statements is true about monopsony?

c and e.

c, d, and e.

Monopsonists exercise complete buying power.

Monopsonists maximize profit by setting MRP = MFC.

Monopsonists face the whole labor supply curve

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Question 20

A decrease in the price of the output will decrease the firm's demand for labor.

True

False

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Homework Answers

Answer #1

14) marginal factor cost is always greater than the wage rate. This is because the wage rate is determined by the labour supply function and the marginal factor cost is represented by the difference in the total cost of hiring that labour

17) this statement is false. The wage rate as well as the number of workers hired are both relatively lower. This is because labor demand function and marginal factor cost function are used to determine the market equilibrium

19) Monopsonists maximize profit by setting MRP = MFC.

20) the statement is true. demand for labour is a function of price of the product because it is a derived demand. When the price of the product increases, producers attempt to increase the quantity supplied and so they use more labor.

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