If the marginal cost of labor curve lies above the labor supply curve, the firm is likely a(n) A

Marketing Jan 14, 2021

If the marginal cost of labor curve lies above the labor supply curve, the firm is likely a(n)

A. monopsony.

B. bilateral monopsony.

C. oligopoly.

D. monopoly.

Expert Solution

The correct answer is A. If the marginal cost of the labor curve lies above the labor supply curve, the firm is likely a monopsony.

A monopsony is a market structure in which firms are authorized to employ the labor factor of production. In the monopsony structure, the workers are paid similar wages hence causing a change in the overall cost required to hire one more worker. This increases the labor's marginal factor cost, causing it to be above the labor supply curve.

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