The Figure Given Below Represents Equilibrium in the Labor Market

question 17

Multiple Choice

The figure given below represents equilibrium in the labor market with the demand and supply curves of labor.Figure 14.6
In the figure,
D = MRP implies demand for labor = Marginal Revenue Product
MFC represents Marginal Factor Cost curve
S represents the supply curve of labor

-A firm that was initially a monopsonist, but now has to buy from a competitive resource market will:

• A)buy more amount of resources and pay a higher price for these resources.
• B)buy the same amount of resources and pay a higher price for these resources.
• C)buy less amount of resources and pay a lower price for these resources.
• D)buy less amount of resources and pay a higher price for these resources.
• E)buy more amount of resources and pay a lower price for these resources.

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Definitions:

Gain-sharing Plan

A compensation strategy where employees receive bonuses for performance improvements or cost savings they contribute to.

Piece Rate

A compensation system where workers are paid a fixed sum for each unit of production completed, rather than by the hour or salary.

Individual

Referring to a single human being as distinct from a group, class, or family.

Team-based Pay

A compensation strategy where pay is based on the performance of the team as a whole, rather than individual performance.