In a monopsony market, the marginal factor cost is typically _____ than the supply curve, leading to potential inefficiencies in labor allocation.

In a monopsony market, there is only one buyer for a particular type of labor, which gives that buyer significant power over wages and employment conditions. The marginal factor cost, which is the cost of hiring one more worker, is usually higher than the wage set by the supply curve. This happens because to attract additional workers, the monopsonist must raise wages not just for the new hire but also for existing employees. As a result, the firm may hire fewer workers than what would be considered efficient in a competitive market, leading to inefficiencies in labor allocation. For example, if a company needs more workers but chooses to hire less because of the high marginal cost, it misses out on potential productivity gains and the benefits that come with a larger workforce.