The Supply of Labour to a Monopsonistic Firm Is W

Multiple Choice

The supply of labour to a monopsonistic firm is w = 10 + z, where w is the wage rate and z is quantity of labour. The firm's MRP = 70 - z. The firm employs only labour and a minimum wage is imposed on the firm. Relative to the initial monopsony equilibrium, the minimum wage will induce the firm to increase employment if the minimum wage is:

A) less than $30.
B) less than $50.
C) larger than $20, but less than $40.
D) larger than $30, but less than $50.