What is the primary difference between a monopsonist and a firm which operates in a perfectly competitive labour market? The monopsonist is likely to be more profitable. In order to recruit another worker, the monopsonist incurs a larger increase in labour costs. In order to recruit another worker, the monopsonist incurs a smaller increase in labour costs. The monopsonist hires such that the marginal revenue product of labour is equal to the marginal labour cost, but the non-monopsonist does not.
What is the primary difference between a monopsonist and a firm which operates in a perfectly competitive labour market? The monopsonist is likely to be more profitable. In order to recruit another worker, the monopsonist incurs a larger increase in labour costs. In order to recruit another worker, the monopsonist incurs a smaller increase in labour costs. The monopsonist hires such that the marginal revenue product of labour is equal to the marginal labour cost, but the non-monopsonist does not.
Chapter10: Labor Markets And Income Distribution
Section: Chapter Questions
Problem 6SQP
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Transcribed Image Text:What is the primary difference between a monopsonist and a firm which operates in
a perfectly competitive labour market?
The monopsonist is likely to be more profitable.
In order to recruit another worker, the monopsonist incurs a larger increase in
labour costs.
In order to recruit another worker, the monopsonist incurs a smaller increase in
labour costs.
The monopsonist hires such that the marginal revenue product of labour is equal
to the marginal labour cost, but the non-monopsonist does not.
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