Explain the concept of marginal factor cost. Why is the marginal factor cost higher than the wage rate?
What will be an ideal response?
The marginal factor cost is the increase in total cost when one additional factor of production (e.g., labor) is hired. The MFC is higher than the wage rate because the monopsonist faces the upward-sloping market labor supply curve. As a result, when an additional worker is hired at the required higher wage, the monopsonist is forced to raise the wages of all workers employed. This raises the MFC above the wage rate paid to the additional worker.
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Policies based on normative economic ideas tend to increase economic efficiency and improve equity
Indicate whether the statement is true or false
In graphical form, the presence of an external benefit that is ignored by consumers can be shown as
A. a market demand curve to the left of the market demand curve for which the consumers take the external benefit into account. B. a market demand curve the same as the market demand curve for which the consumers take the external benefit into account. C. a market demand curve to the right of the market demand curve for which the consumers take the external benefit into account. D. the absence of a market demand curve.
Which of the following would not be included in the government consumption expenditures and gross investment (G) category of GDP?
a. The payments made to Social Security recipients. b. The expenditures made to repair a highway. c. The spending for professors at state universities. d. The purchase of new china for White House functions.
A nation's total external wealth is calculated as:
A) the sum of total assets minus total liabilities expressed in local currency. B) total assets expressed in foreign currency minus total liabilities expressed in foreign currency. C) the sum of total assets minus total liabilities expressed in foreign currency. D) the sum of physical assets within the nation, domestic stock market capitalization, and government assets minus total liabilities.