If a Firm Buys Some Labor in a Competitive Market

question 10

Multiple Choice

If a firm buys some labor in a competitive market and some labor as a monopsonist,the firm is most likely to

• A) pay the same wage to both types of labor.
• B) pay a lower wage to the labor purchased in the competitive market.
• C) pay a higher wage to the labor purchased in the competitive market.
• D) not exercise any of its monopsony power.

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Definitions:

Perpetual Inventory System

A continuous tracking method for inventory that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

LIFO

Last In, First Out, an inventory accounting method where the last items placed in inventory are the first ones to be used or sold.

Ending Inventory

Products' value that is available for transaction at the culmination of an economic period.

Merchandise Inventory

Goods held by a business for the purpose of resale to customers in the ordinary course of business.