Question

A monopsonist in the labor market has A. a downward sloping marginal revenue product curve. B....

A monopsonist in the labor market has

A.

a downward sloping marginal revenue product curve.

B.

an upward sloping labor supply curve.

C.

a perfectly elastic labor supply.

D.

a decreasing average variable cost.

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Answer #1

Answer- A. Downward sloping marginal revenue product curve is the correct answer.

A monopsony occurs when a firm has market power in employing factors of production (e.g., labour). There is one buyer and many sellers present in the market. Here, the demand curve is represented by the marginal revenue product, which is downward sloping, and the supply is represented by the average costs, which is upward sloping. The equilibrium occurs where demand is equal to supply. Therefore, a monopsonist in the labor market has a downward sloping marginal revenue product curve.

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