Asked by Isabella Garcia on Jul 18, 2024
Verified
What is a monopsony? Explain its three characteristics as applied to a labor market.
Monopsony
A market situation where there is only one buyer for a product or service.
Labor Market
The supply of available workers in relation to available work.
- Describe the characteristics of a monopsony in the labor market and its effects.
Verified Answer
JP
Jennifer PosadaJul 20, 2024
Final Answer :
A monopsony is a market structure in which there is only a single buyer of a good, service, or resource. The three characteristics are: (1)there is only a single buyer of a particular type of labor, (2)the workers providing this type of labor have few employment options other than working for the monopsony, and (3)the firm is a "wage maker" because the wage rate it must pay varies directly with the number of workers it employs.
Learning Objectives
- Describe the characteristics of a monopsony in the labor market and its effects.