A Monopsonist Wants to Purchase More Labor

question 224

Multiple Choice

A monopsonist wants to purchase more labor. Which of the following statements is true?

• A) The wage rate that the monopsonist has to pay future workers is lower than it pays current workers since there is no other place to work.
• B) The wage rate that the monopsonist has to pay future workers will be the same rate it pays current workers.
• C) The wage rate that the monopsonist has to pay future workers is higher than what it will continue to pay current workers.
• D) The monopsonist will have to raise the wage rate for current and additional employees.

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Definitions:

Discounted Cash Flow

A financial analysis technique that estimates the value of an investment based on its expected future cash flows, discounted back to their present value.

Future Cash Flows

Estimated monetary gains or expenditures that a company expects to receive or pay out in the future.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal installments.

Mutually Exclusive

A statistical term describing two or more events that cannot occur simultaneously.