Answer to Question #94341 in Economics for Mbagwu Chidalu Ambless

Question

The individual supply of labour for a monopsonist has 2500 worker's,he pays $20 each to the workers per hour,considering his Marginal Revenue Product the monopsonist no longer comfortable with his MRP decides to employ additional labour,he decides to increase the initial wage per worker from $20 to $20.50. What will be the Average Factor Cost of the monopsonist per hour before employing the additional capital?

Answer 1

The Average Factor Cost of the monopsonist per hour before employing the additional capital is equal to the wage rate of $20 per hour.