A pure monopsony exists in a labor market when
A)a labor union dominates the labor market.
B)a single buyer buys all of a given type of labor that has few other employment opportunities.
C)only a few firms purchase the services of labor in the market.
D)many competing firms purchase the services of labor in the market.

Question

Quizplus · Accepted Answer

A pure monopsony exists when there is only one buyer in the market, which means that the employer has significant bargaining power over workers, and they can offer wages lower than the competitive rate. This situation usually occurs in areas where there is only one major employer or where specific skills are needed, and there are few other employment opportunities available. A labor union dominating the market or many competing firms purchasing services of labor will not create a monopsony as there are multiple buyers in the market.

A Pure Monopsony Exists in a Labor Market When