For a monopsony buyer, the marginal expenditure per unit of an input:
A)equals the average expenditure per unit.
B)is less than the average expenditure per unit.
C)exceeds the average expenditure per unit.
D)is equal to the price.

Question

Quizplus · Accepted Answer

In a monopsony, the buyer has significant control over the market and often pays different prices for additional units of an input. Therefore, the marginal expenditure (the additional cost of buying one more unit of the input) exceeds the average expenditure per unit because purchasing additional units typically requires paying a higher price for those units.

For a Monopsony Buyer, the Marginal Expenditure Per Unit of an Input