The Profit-Maximizing Rule for Employment of a Variable Input in a Monopsonistic

question 31

Multiple Choice

The profit-maximizing rule for employment of a variable input in a monopsonistic input market is to employ that input until:

• A) its marginal revenue product is equal to the marginal cost.
• B) its net marginal revenue is equal to the marginal cost.
• C) its marginal revenue product is greater than the marginal cost.
• D) its net marginal revenue is greater than the marginal cost.
• E) its marginal revenue product is less than the marginal cost.

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Definitions:

Selling Price

The actual amount a customer pays for a product or service.

Mark-up

A markup on the goods’ purchase cost to account for administrative expenses and profit.

SuperMart

A large supermarket, often part of a chain, offering a wide variety of goods.

Markdown

A reduction from the original or list price of a good or service to increase its attractiveness to buyers.