Question

1. An increase in the supply of labor, the variable factor of production, will cause a monopsonist's: a. marginal revenue product curve to shift up b. marginal revenue product curve to shift down arginal factor cost curve to shift up marginal factor cost curve to shift down ARP e. both "a" and "c" are correct answers f. both "b" and "c" are correct answers g. both "a" and "d" are correct answers h. both "b" and "d" are correct answers i. none of the above answers are correct 2. An increase in the demand for it's final product will cause a monopolist's: marginal revenue product curve to shift up marginal revenue product curve to shift down c. marginal factor cost curve to shift up d. marginal factor cost curve to shift down e. both "a" and "c" are correct answers f. both "b" and "c" are correct answers g)both "a" and "d" are correct answers both "b" and "d" are correct answers n increase in the demand for it's final product will cause a monopolist that is also a monopsonist to: a increase production of the final product b. increase the price of the final product c. increase the wage rate (i.e, the price of labor) d. both "a" and "b" are correct answers e. both "a" and "c" are correct answers f, both "b"and "c" are correct answers a", "b", and "c" are correct answers none of the above answers are correct

Answer 1

1) For a monopsonist, marginal revenue product is the labor demand and marginal factor cost is the labor supply which is derived from the labor supply of the market. Now if market labor supply curve shifts right, marginal factor cost function will also shift right / down. Option D

2) For a monopsonist, marginal revenue product is the labor demand and marginal factor cost is the labor supply which is derived from the labor supply of the market. Hence, when labor demand increases, MRP curve shifts up/right. Option A

3) Demand for product determines the determines the demand for labor. When demand for product increases, it shifts right and so price rises. When price rises, demand for labor / MRP curve shifts right which for a given labor marginal factor cost curve, raises the level of wages. Option G.