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Monopsonistic Markets Practice Test
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Q1
Based on the monopsonistic labor market shown in the table, a single agricultural processor is the only major employer of packers in a rural county. The labor supply to the firm is upward sloping, so MFC exceeds the wage. The processor’s MRP schedule is shown. How many workers does the monopsonist hire and at what wage?
Monopsony labor market data
Workers (L) Wage ($/hour) MFC ($/hour) MRP ($/hour) 1 13 13 32 2 14 15 30 3 15 17 28 4 16 19 26 5 17 21 24 6 18 23 22 7 19 25 20
Based on the monopsonistic labor market shown in the table, a single agricultural processor is the only major employer of packers in a rural county. The labor supply to the firm is upward sloping, so MFC exceeds the wage. The processor’s MRP schedule is shown. How many workers does the monopsonist hire and at what wage?
Monopsony labor market data
| Workers (L) | Wage ($/hour) | MFC ($/hour) | MRP ($/hour) |
|---|---|---|---|
| 1 | 13 | 13 | 32 |
| 2 | 14 | 15 | 30 |
| 3 | 15 | 17 | 28 |
| 4 | 16 | 19 | 26 |
| 5 | 17 | 21 | 24 |
| 6 | 18 | 23 | 22 |
| 7 | 19 | 25 | 20 |
