Asked by Kevin Rodrigues on May 30, 2024
Verified
If the factor supply curve facing a monopolist is the market supply curve, and if the market supply curve is an upward sloping straight line, the marginal expenditure curve:
A) lies below the market supply curve.
B) lies above the market supply curve.
C) is the market supply curve.
D) crosses the market supply curve at the market wage rate.
E) Either A or B is possible.
Marginal Expenditure Curve
A graph showing the additional cost incurred from purchasing an additional unit of a good or service.
Market Supply Curve
The market supply curve graphically represents the relationship between the total quantity of a good that producers are willing to supply and the price of the good.
Market Wage Rate
The prevailing pay rate for work of a similar nature in a specific industry or geographic area.
- Investigate the linkage between the supply and demand curves of factors and marginal expenditure within a monopsony framework.
Verified Answer
ZK
Zybrea KnightJun 04, 2024
Final Answer :
B
Explanation :
The marginal expenditure curve lies above the market supply curve because, with an upward sloping supply curve, each additional unit of input costs more than the previous one, leading to a higher marginal expenditure for each additional unit purchased.
Learning Objectives
- Investigate the linkage between the supply and demand curves of factors and marginal expenditure within a monopsony framework.