In a certain labor market, workers are required to have a certain skill-set. There are many workers who have the skill-set, but they can only find employment in one company. That one company is called a
A) pure monopoly.
B) monopolistic competitor.
C) monopsony.
D) natural monopoly.

Question

Quizplus · Accepted Answer

A monopsony occurs when there is only one buyer in a market, and in this case, the one company is the only employer for workers with the required skill-set. This gives the company significant control over the wages and working conditions offered to these workers. A pure monopoly occurs when there is only one seller in a market, which is not the case here since there may be other companies in the market that do not require the specific skill-set. A monopolistic competitor occurs when there are many firms in a market selling similar but differentiated products, and a natural monopoly occurs when one company can produce at a lower cost than any potential rivals due to large economies of scale. Neither of these scenarios describes the situation described in the question.

In a Certain Labor Market, Workers Are Required to Have