A Monopsonist's Marginal Factor Cost (MFC) Curve Lies Above Its

question 40

Multiple Choice

A monopsonist's marginal factor cost (MFC) curve lies above its supply curve because the firm must:

• A) lower the factor price to hire more.
• B) increase the price of its product to sell more.
• C) increase the factor price to hire more.
• D) lower the product price to sell more.

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Definitions:

Marginal Revenue

The extra revenue generated by the sale of an additional unit of a product or service.

Average Total Cost

The sum of average fixed costs and average variable costs, divided by the total quantity of output, reflecting the per-unit cost of production including all expenses.

Marginal Cost

The hike in aggregate cost linked with the fabrication of one extra unit of a product or service.

Marginal Revenue

The additional income received from selling one more unit of a good or service, critical in determining optimal production levels.