In a small town, there is only one factory that hires workers, creating a monopsony labor market. The factory is considering hiring additional workers but is facing rising marginal costs due to limited labor supply. If the factory's marginal revenue product of labor for the next worker is $15 and the marginal cost of hiring that worker is $20, what should the factory do to maximize its profits?

In a monopsony labor market, the factory is the only employer, which gives it significant control over wages and hiring. If the marginal revenue product of labor for the next worker is $15, this means the additional value the worker brings to the factory is only $15. However, the cost to hire that worker is $20, which is higher than the value they provide. To maximize profits, the factory should not hire the additional worker since the cost exceeds the benefit, leading to a loss. For example, if the factory hired the worker, it would lose $5 on that hire, which does not help in increasing overall profits.