A monopsony exists when
A)there is a single seller with no rivals in an input market.
B)there is a labor union controlling labor supply in a labor market.
C)there is a single buyer with no rivals in an input market.
D)employers in a labor market face a horizontal labor supply curve.

Question

Quizplus · Accepted Answer

A monopsony exists when there is a single buyer with no or limited rivals in an input market. This gives the buyer market power to influence the price of the input they are purchasing, which results in lower wages or prices paid to suppliers. The other options do not accurately describe a monopsony. A is a monopoly, B describes a labor union, and D describes a perfectly competitive labor market.

A Monopsony Exists When