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Theme 3
Market Structures
3.4.6 - Monopsony
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Created by
Saberie Mohammad
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Cards (14)
What is a monopsony?
A market with one
buyer
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In which market does buyer power typically exist?
Labour markets
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What are the characteristics of a monopsony?
Single
buyer
, few
alternatives
for sellers
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What does a monopsonist typically do to wages?
Suppresses
wages
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What is the marginal cost of labor in a monopsony?
Lower than in
competitive markets
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How does a monopsony affect employment levels?
Reduces
employment levels
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What is the difference between monopsony and monopoly?
Monopsony has one
buyer
, monopoly has one
seller
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What is wage suppression in a monopsony?
Monopsonist
pays lower wages
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What is a potential effect of monopsony on unemployment?
Fewer
jobs
offered at lower
wages
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What policy can prevent excessively low wages in a monopsony?
Minimum wage
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How does government intervention help in a monopsony?
Encourages
market competition
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What role do trade unions play in a monopsony?
Workers
negotiate for better
wages
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What are the effects of a monopsony on wages and employment?
Lower
wages
Reduced
employment levels
Fewer
jobs
offered
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What policies can mitigate the effects of monopsony?
Minimum wage laws
Government intervention
to promote competition
Trade unionisation
for wage negotiation
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