For a monopsony, the marginal cost of labor curve lies above the labor supply curve because
A.
to hire one more unit of labor requires that the firm offer a lower wage.
B.
to hire one more unit of labor requires that the wage be raised for just the last unit of labor hired.
C.
to hire one more unit of labor requires that the wage be raised for all units of labor
Answer
C.
to hire one more unit of labor requires that the wage be raised for all units of labor
This is because monopsony firm is a wage‐searcher rather than a wage‐taker and the marginal factor cost (MFC) of labor curve lies above the supply curve of labor which requires increases ion wages for all workers that are hired including those already hired
Explanation
To be precise, the reason behind this is that since the monopsonist faces the industry supply curve of labor and each worker is paid the same wage, any changes in total wage cost exceed the wage rate necessary to hire each additional worker which implies that the mrginal cost factor of labor lies above the supply curve of labor
