Multiple Choice
What is the primary difference between a monopsonist and a firm which operates in a perfectly competitive labour market?
A) The monopsonist is likely to be more profitable.
B) In order to recruit another worker, the monopsonist incurs a smaller increase in labour costs.
C) In order to recruit another worker, the monopsonist incurs a larger increase in labour costs.
D) The labour supply curve is irrelevant for the monopsonist.
E) The monopsonist hires such that the marginal revenue product of labour is equal to the marginal labour cost, but the non-monopsonist does not.
Correct Answer:

Verified
Correct Answer:
Verified
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