If a firm is the sole employer of a factor of production, it is known as
A)a monopoly.
B)a competitor.
C)a monopsony.
D)an economically discriminating firm.

Question

Quizplus · Accepted Answer

A monopsony is a market structure where a single buyer (the firm) is the only employer for a particular factor of production, such as labor. This gives the firm significant bargaining power in setting wages and working conditions, and can result in lower wages and reduced employment opportunities for workers. Thus, if a firm is the sole employer of a factor of production, it is known as a monopsony. None of the other options accurately describe this scenario.

If a Firm Is the Sole Employer of a Factor