If a Firm Is a Monopsonist in the Hiring of Both

question 151

Multiple Choice

If a firm is a monopsonist in the hiring of both labor and capital,it will obtain the profit-maximizing quantities of labor and capital when:

• A) MRP_L/P_L = MRP_C/P_C = 1.
• B) MRP_L/MRC_L = MRP_C/MRC_C = 1.
• C) the MRP of labor equals the MRP of capital.
• D) the MRC of labor equals the MRC of capital.

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Definitions:

Marginal Cost

The cost of producing one more unit of a good or service, considering variable costs but not fixed costs.

Block Pricing

Practice of charging different prices for different quantities or “blocks” of a good.

Price Discrimination

Practice of charging different prices to different consumers for similar goods.

Electricity Sales

The volume of electrical energy sold, typically measured in kilowatt-hours (kWh), to end users or consumers.