Consider a Monopsonistic Labour Market

question 8

Multiple Choice

Consider a monopsonistic labour market.One hundred units of labour will be supplied if the wage rate is $12,and 101 units of labour will be supplied if the wage rate is $14.The marginal cost of the 101st worker is

• A)$14.
• B)$140.
• C)$214.
• D)$1414.
• E)Not enough information to know.

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Definitions:

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogeneous product, perfect information, and free entry and exit.

Elastic

A term used to describe a good's demand sensitivity to changes in price; highly elastic means demand changes significantly with price changes.

Industry Output

The total production of goods and services produced by an industry within a specific period.

Long-run Cost Function

The relationship between output quantity and total cost when all inputs, particularly capital, can be varied to minimize cost.