In a monopsony labor market, the optimal quantity of workers is determined by the point where the __________ equals the marginal factor cost.

In a monopsony labor market, the optimal quantity of workers is determined by the point where the marginal revenue product of labor equals the marginal factor cost. This means that the business will hire workers up to the point where the extra money made from hiring one more worker is equal to the extra cost of paying that worker. For example, if a factory finds that hiring one more worker adds $100 to its earnings but costs $120, it won't hire that worker because the cost outweighs the benefit. By balancing these two factors, the monopsonist can ensure they are not overpaying for labor while still maximizing their profits. Understanding this balance helps businesses operate efficiently in a labor market with only one dominant employer.