Use the Following to Answer Question(s): Monopsony

question 178

Multiple Choice

Use the following to answer question(s) : Monopsony

-(Exhibit: Monopsony) Which of the following is (are) true?

• A) Given perfect competition in the factor market, the price of a factor is equal to the MFC.
• B) Given imperfect competition in the factor market, the price of a factor is less than the MFC.
• C) Given perfect competition in the product market, MRP = MP times the price of output, and given imperfect competition in the product market, MRP = MP times MR, which is less than MP times price.
• D) All of the above are true.

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Definitions:

External Sales

Sales made to parties outside of the company, as opposed to internal transactions.

Variable Cost

Costs that vary directly with the level of production or volume of output.

Excess Capacity

The situation where a company's production facilities can produce more goods than currently demanded by its market.

General Transfer-Prizing Rule

A principle used to determine the price at which goods and services should be transferred between departments within the same organization.