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A
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C
D → A → B → C
D
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Understanding the Answer
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Answer
To analyze hiring decisions in a monopsony labor market, you start by identifying the marginal revenue product of labor, which tells you how much additional revenue each worker brings to the company. Next, you analyze the marginal cost of hiring additional workers, as this cost can vary in a monopsony due to the power the employer has over wages. After understanding these two concepts, you compare the marginal revenue product to the marginal factor cost to see if hiring more workers is beneficial. Finally, you determine the optimal number of workers to hire based on where the marginal revenue product equals the marginal cost. For example, if hiring one more worker increases revenue by $100 but costs $120, it would not be optimal to hire that worker.
Detailed Explanation
First, you find out how much extra money each worker brings in, called the marginal revenue product. Other options are incorrect because This order starts with costs instead of understanding how much workers earn; This option suggests comparing values before knowing them.
Key Concepts
Monopsony Labor Market
Marginal Revenue Product
Marginal Factor Cost
Topic
Monopsony Labor Market Analysis
Difficulty
easy level question
Cognitive Level
understand
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