Question

# A monopsonist labor market has the following output and total factor cost of labor data (total...

A monopsonist labor market has the following output and total factor cost of labor data (total factor cost= TFC).

 MONOPSONIST Workers (n) 1 2 3 4 5 6 7 8 Total Physical Product (TPP) 0 19 27 34 40 45 49 52 Total Factor Cost (TFC) 12 26 42 60 80 102 126 152

A. Number hired = 7; wage = \$24

B. Number hired = 5; Wage = \$12

C. none of the above

D. Number hired = 7; wage = \$18

E. Number hired = 5; wage = \$22

F. Number hired = 5; wage = \$6

Answer: Number hired = 7; wage = \$18

 Workers (n) 1 2 3 4 5 6 7 8 Total Physical Product (TPP) 0 19 27 34 40 45 49 52 Total Factor Cost (TFC) 12 26 42 60 80 102 126 152 Wage per worker 12 =C3/C1 =D3/D1 =E3/E1 =F3/F1 =G3/G1 =H3/H1 =I3/I1
 Workers (n) 1 2 3 4 5 6 7 8 Total Physical Product (TPP) 0 19 27 34 40 45 49 52 Total Factor Cost (TFC) 12 26 42 60 80 102 126 152 Wage per worker 12 13 14 15 16 17 18 19

Considering the wages per worker, Total factor cost is considered as the total wages paid to the employee. So, the wage per worker should be calculated as wage per worker = Total factor cost (TPC)/ workers(n)

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