Question

Take a look at Figure 29-5. Suppose that the monopsonist is contemplating whether it might consider hiring 7 units of labour per time period. To induce 7 units of labour to be supplied by workers, the firm would have to pay an hourly wage rate of $24 per hour. What would be the marginal factor cost of hiring a 7th unit of labour per time period?

Short answer

The marginal factor cost of hiring a $7th$unit of labour per time period is$\$36$.

Step-by-step solution

Given Information

Marginal cost is the additional cost brought about for delivering an additional one unit of the ware.

A union resembles a syndication firm in that it is the main provider of work, similarly to an imposing business model is the main provider of the upside.

Explanation

Calculating,

The hourly wage rate to induce $7$units of labour = $\$24$per hour

the total wage bill when the $7th$unit of labour is employed = $\mathrm{\$}24\times 7=\mathrm{\$}168$

the total wage bill when the $6th$unit of labour is employed = $\$132$

The marginal factor cost of hiring a $7th$unit of labour per time period =$\mathrm{\$}168-132=\mathrm{\$}36$