AP Microeconomics Quiz
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FACTOR MARKETS
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Based on the monopsonistic labor market shown in the table, a single nursing home is the only major employer of certified nursing assistants in a rural town. The nursing home faces an upward-sloping labor supply, so its marginal factor cost (MFC) exceeds the wage. The nursing home's marginal revenue product (MRP) of labor schedule is also shown. How many workers does the monopsonist hire and at what wage?
Monopsony labor market data
| Workers (L) | Wage ($/hour) | MFC ($/hour) | MRP ($/hour) |
|---|---|---|---|
| 1 | 10 | 10 | 34 |
| 2 | 11 | 12 | 30 |
| 3 | 12 | 14 | 26 |
| 4 | 13 | 16 | 22 |
| 5 | 14 | 18 | 18 |
| 6 | 15 | 20 | 14 |
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