Asked by Hannah Charlton on Jun 04, 2024

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A monopsonistic employer's marginal resource (labor) cost curve:

A) is always more elastic than the labor supply curve.
B) coincides with the labor supply curve.
C) lies below the labor supply curve because the higher wage paid to an additional worker must also be paid to all other employed workers.
D) lies above the labor supply curve because the higher wage paid to an additional worker must also be paid to all other employed workers.

Marginal Resource Cost Curve

A graphical representation showing the change in total cost incurred by producing one more unit of a resource, helping firms decide the optimal level of resources to employ.

Labor Supply Curve

A graphical representation showing the relationship between the wages offered and the quantity of labor workers are willing to supply.

  • Study the repercussions of monopsony for wage scales and the amount of employment.
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ZK
Zybrea KnightJun 05, 2024
Final Answer :
D
Explanation :
In a monopsony, the employer has significant control over the labor market and can set wages. When a monopsonistic employer decides to hire an additional worker, they often have to increase the wage rate to attract that worker. However, due to the nature of most labor contracts, this higher wage must also be paid to all other workers already employed, not just the additional worker. This requirement increases the cost of hiring an additional worker above the wage rate that the worker receives, which is why the marginal resource (labor) cost curve lies above the labor supply curve.