Monopsony and Marginal Revenue Product

The video tutorial explains the concept of monopsony, where a single large buyer dominates the labor market. It covers how to calculate the marginal cost of labor and the marginal revenue product of labor. The tutorial also discusses how a monopsonist maximizes profit by hiring workers up to the point where the marginal revenue product equals the marginal cost. It concludes with determining the optimal employment and wage levels in a monopsonistic market.

What is a monopsony?

• A market with many buyers and sellers

• A market with no buyers

• A market with a single seller

• A market with a single large buyer

How is the marginal cost of labor calculated in a monopsony?

• Total labor cost divided by total output

• Change in total labor cost divided by change in labor quantity

• Change in total revenue divided by change in labor quantity

• Total revenue divided by total labor cost

What does the marginal revenue product of labor depend on?

• The total revenue and the number of workers

• The price of the product and the marginal product of labor

• The total cost of labor and the number of workers

• The average cost of labor and the total output

In a monopsony, when does a firm stop hiring additional workers?

• When the total labor cost is minimized

• When the wage equals the marginal revenue product of labor

• When the marginal cost of labor equals the marginal revenue product of labor

• When the total revenue is maximized

What is the lowest wage a monopsonist can offer when hiring workers?

• The wage equal to the marginal revenue product of labor

• The wage equal to the average cost of labor

• The lowest wage that workers are willing to accept

• The wage equal to the total labor cost

In a monopsony, what is the relationship between marginal revenue product and wage?

• Marginal revenue product can be greater or equal to the wage

• Marginal revenue product is always greater than the wage

• Marginal revenue product is always equal to the wage

• Marginal revenue product is always less than the wage

What is the primary goal of a monopsonist when hiring workers?

• To maximize the wage offered to workers

• To equalize the marginal revenue product and marginal labor cost

• To maximize the number of workers

• To minimize the total labor cost

How can the marginal revenue product of labor increase?

• By increasing the number of workers

• By decreasing the price of the product

• By decreasing the total labor cost

• By increasing the price of the product or the marginal product of labor

What happens to employment levels when the marginal revenue product increases?

• Employment levels decrease

• Employment levels remain the same

• Employment levels fluctuate randomly

• Employment levels increase

What is the effect of a higher marginal revenue product on wages in a monopsony?

• Wages fluctuate randomly

• Wages increase

• Wages remain the same

• Wages decrease