Answer to Question #94342 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 monopsonist Marginal Revenue Product?

Answer 1

The monopsonist Marginal Revenue Product will be:

MRP = MR×MPL. In equilibrium MRP = w, so it will equal to $20.5.