If a monopsonist pays a lower marginal factor cost than the marginal revenue product of labor, what is the likely effect on overall economic welfare in the labor market?

In a monopsony, a single employer has significant control over the labor market, allowing them to set wages lower than what workers might earn in a competitive market. When a monopsonist pays a lower marginal factor cost than the marginal revenue product of labor, it means they are not fully compensating workers for the value they create. This situation can lead to decreased overall economic welfare because workers receive less income and may be less motivated to work efficiently, which can reduce productivity. For example, if a factory owner pays workers $10 an hour while their work generates $15 in value, the workers are not being rewarded fairly for their contributions. As a result, the economy may suffer from lower consumption and reduced growth, harming everyone involved.