What Is the Primary Difference Between a Monopsonist and a Firm

question 33

Multiple Choice

What is the primary difference between a monopsonist and a firm which operates in a perfectly competitive labour market?

• A) The monopsonist is likely to be more profitable.
• B) In order to recruit another worker, the monopsonist incurs a smaller increase in labour costs.
• C) In order to recruit another worker, the monopsonist incurs a larger increase in labour costs.
• D) The labour supply curve is irrelevant for the monopsonist.
• E) The monopsonist hires such that the marginal revenue product of labour is equal to the marginal labour cost, but the non-monopsonist does not.

---

Definitions:

Void Contract

An agreement that is invalid from the outset and has no legal force or effect, making it unenforceable by law.

Cure

A breaching party’s right to provide conforming goods when nonconforming goods were initially delivered; subject to a reasonable time test.

Price Reduction

A decrease in the selling price of goods or services, often used as a strategy to increase consumer demand or clear out inventory.

Void Contract

An agreement that lacks legal enforceability or is null from its inception due to certain legal deficiencies.