Monopsony

What is a monopsony in economics?

• A situation where there is one seller and many buyers

• A situation where there are many sellers and many buyers

• A situation where there are no sellers or buyers

• A situation where there is one buyer and many sellers

In a monopsony, who has market power in employing factors of production?

• The firm

• The consumers

• The government

• The workers

What is an example of a monopsony in a labour market?

• A competitive labour market with no dominant employer

• A government employing civil servants, nurses, police, and army officers

• A coal mine owner in a town with many workers seeking employment

• A town with multiple employers and multiple workers

What is the profit maximisation strategy for a monopsony?

• Employ as many workers as possible at the lowest wage

• Keep wages low to increase profits

• Employ a number of workers where the marginal cost of labour equals the marginal revenue product

• Pay the highest wages to attract the best workers

How can a minimum wage affect employment in a monopsony?

• It will decrease employment

• It will have no effect on employment

• It will increase employment

• It will lead to higher wages without affecting employment

What is a problem of monopsony in labour markets?

• Firms with monopsony power care more about working conditions

• It increases equality in society

• It leads to higher wages for workers

• Workers are paid less than their marginal revenue product

In which industry do supermarkets have monopsony power?

• Buying food from farmers

• Buying food from small retailers

• Buying food from other supermarkets

• Buying food from consumers

What is an example of the gig economy facing a monopsony employer?

• Uber drivers having little control over rates of pay and strict criteria from Uber

• Uber drivers having complete freedom in choosing their work hours

• Uber drivers having many alternative job options

• Uber drivers having control over their rates of pay

What is a consequence of monopsony in product markets?

• It leads to higher prices for consumers

• It increases competition among sellers

• It enables farmers to negotiate better prices

• It can lead to protests about the price of goods

What is a potential problem of firms with monopsony power?

• They make high profits at the expense of consumers and workers

• They have little control over the market

• They are forced to improve working conditions

• They have to pay higher wages to attract workers