Why does a monopsonist’s marginal expenditure curve lie above the labo

Why does a monopsonist’s marginal expenditure curve lie above the labor supply curve?

What will be an ideal response?

 

ANSWER

To hire additional labor, the monopsonist must increase the wage paid to all units of labor. Thus the marginal expenditure of the next unit of labor is the higher wage plus the wage increase paid to all previously hired labor.

 

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