Consider a community with a single employer. That employer's marginal expenditure curve must lie above the...

Consider a community with a single employer. That employer's marginal expenditure curve must lie above the labor supply curve because the monopsonist must:

A. choose the competitive quantity of labor

B. increase its marginal expenditure by the amount paid to the last employee hired

C. raise the wage paid to its existing employees if it wants to attract additional units of labor

D. pay a wage higher than the competitive wage

Solutions

Expert Solution

The employer's marginal expenditure curve must lie above the labor supply curve because the monopsonist must:

C) raise the wage paid to it's existing employees if it wants to attract additional units of labor.

Reason: The labor supply curve is positively sloped in case of monopsonist.

Rahul Sunny answered 2 years ago

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