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AP Microeconomics Prd 4 D a Define Using Graphs As Appropriate the Characteristics of Monopsonistic Markets B Explain Using Graphs Where Appropriate Questions

Analyze a single-buyer labor market by using MRP and MFC to choose employment, reading wages from labor supply, and evaluating competition and minimum wages.

Syllabus
Effective Fall 2026
Course
AP Microeconomics

Exam points

  • identify monopsony as a labor market with one employer facing an upward-sloping labor supply curve
  • explain why MFC lies above labor supply when a higher wage must be paid to all existing workers
  • find the monopsonist's profit-maximizing employment where MRP equals MFC
  • read the monopsony wage from the labor-supply curve at the profit-maximizing employment
  • explain why MRP exceeds the wage at monopsony equilibrium even though MRP equals MFC
  • compare monopsony with competitive labor equilibrium using lower employment and a lower wage
  • trace a rightward MRP shift into higher monopsony employment, wage and marginal factor cost
  • analyze a binding minimum wage that can raise monopsony wages and employment toward competitive levels
  • calculate total wage cost after a minimum wage from the regulated wage and employment

AP Microeconomics Prd 4 D a Define Using Graphs As Appropriate the Characteristics of Monopsonistic Markets B Explain Using Graphs Where Appropriate Questions question 1

[Maximum number: 4]

Quartz Excavations is a profit-maximizing firm and the only employer of miners of quartz in a small town. The graph provided shows the labor market for miners.

Figure for Question AP Microeconomics Prd 4 D a Define Using Graphs As Appropriate the Characteristics of Monopsonistic Markets B Explain Using Graphs Where Appropriate Questions question 1 — AP Microeconomics

Question (a)

(a)

Identify Quartz Excavations' profit-maximizing number of miners to hire.

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Question (b)

(b)

Will Quartz Excavations pay its profit-maximizing number of miners a wage rate that is equal to $15, greater than $15, or less than $15? Explain using numbers.

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Question (c)

(c)

Suppose the government sets a minimum wage (a price floor on wages) at $25\$ 25. Calculate the total wage bill for Quartz Excavations at the resulting profit-maximizing number of miners.

Show your work.

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Question (d)

(d)

Suppose that instead of a minimum wage, there is now an increase in the demand for quartz.

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Question (i)

(i)

After the demand for quartz increases, Quartz Excavations hires the new profit-maximizing number of miners. Will the marginal factor cost of the last miner hired be greater than, less than, or equal to the marginal factor cost of the last miner hired before the demand for quartz increased?

[ 1 ]
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