To the right is a small table illustrating how MFC works. Each time the firm wishes to increase empolyment it must raise all wages. The MFC is simply the addition to total cost that results from hiring another worker. Note that the MFC is significantly higher than the wage.

Because the firm faces an MFC above the wage the marginal cost to the firm of another worker is the MFC not the wage. This means that the firm will compare MFC with marginal revenue product in order to hire the profit maximizing number of workers.

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Monopsony
N	W	TC	MFC
0	0	0	0
1	2	2	2
2	3	6	4
3	4	12	6
4	5	20	8
5	6	30	10
6	7	42	12