A firm is likely to be a monopsonist if:
A)the supply of an input to it slopes downward.
B)the supply of an input to it is horizontal.
C)the supply of an input to it slopes upward.
D)the supply of an input to it is vertical.

Question

Quizplus · Accepted Answer

A firm is likely to be a monopsonist if the supply of an input to it slopes upward, meaning that as the firm demands more of the input, the price of the input increases. This suggests that the firm has substantial market power as a buyer of the input, allowing it to drive down the price it pays for the input. A downward-sloping or horizontal supply curve would indicate a more competitive market with numerous buyers, while a vertical supply curve would indicate that the quantity supplied is fixed regardless of the price, which is not likely in most markets.

A Firm Is Likely to Be a Monopsonist If