In the diagram, the ARPL curve represents the average revenue product of labour curve for a profit-maximising monopsony, while the MRPL curve shows its marginal revenue product of labour curve. The firm pays its workers the minimum wage, OW, imposed by the government of the country. The curves AFCL and MFCL indicate the firm’s average and marginal factor cost curves if there were no government intervention. What will happen to the number of workers employed by the firm if the minimum wage is abolished?
- AIt will decrease by JK.
- BIt will decrease by KM.
- CIt will increase by JK.
- DIt will increase by JL.