The Following Figure Represents the Equilibrium in the Labor Market

question 49

Multiple Choice

The following figure represents the equilibrium in the labor market.Figure 14.4
In the figure,
MFC: Marginal Factor Cost curve
D: Demand or the Marginal Revenue Product curve
S: Supply curve
-A monopsonist firm pays a price to a factor that is:

• A)equal to the marginal revenue product of the factor.
• B)greater than the marginal revenue product of the factor.
• C)equal to the marginal factor cost.
• D)greater than the marginal factor cost.
• E)less than the marginal revenue product of the factor.

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Definitions:

Production Efficiency

A level of production in which the economy can no longer produce additional amounts of a good without lowering the production level of another product.

Production Inefficiency

A situation where a firm or economy is not producing at the lowest possible cost or maximally utilizing its resources, leading to waste or lost potential output.

Opportunity Cost

Sacrificing potential opportunities from a range of alternatives by settling on one.

Present Consumption

The portion of current income or resources that is used for consumption, rather than saving or investing.