Economics · Factor Pricing
Given below are two statements: Assertion (A): When the factor market is perfectly competitive but the product market is monopolistic, the firm hires labour up to the point where MRPL = w, where MRPL = MR × MPPL < VMPL = P × MPPL. Reason (R): Since the monopolist's MR < P, the monopolist hires fewer workers than a competitive firm would at the same wage, creating monopolistic exploitation even in a competitive labour market. Choose the most appropriate answer:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1(A) is false, but (R) is true
- 2(A) is true, but (R) is false
- 3Both (A) and (R) are true, but (R) is NOT the correct explanation of (A)
- 4Both (A) and (R) are true, and (R) is the correct explanation of (A)✓
Correct answer
Both (A) and (R) are true, and (R) is the correct explanation of (A)
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