3.4.6 Monopsony

Question 1

What is ‘monopsony power’?

Answer 1

A monopsony occurs when there is a sole buyer

Question 2

What can a monopsony business do?

Answer 2

They can exploit their bargaining power with a supplier negotiating lower prices. Reducing the costs can increase their profit margins

Question 3

What are the costs to suppliers in a monopsony market?

Answer 3

Suppliers will unfortunately receive a lower price for their good resulting in less revenue, less profit (supernormal), job losses, link to efficiency (dynamic especially)

Question 4

What are the cost to consumers within a monopsony market?

Answer 4

Potentially less choice, especially if dynamic efficiency isn’t a thing
Potentially, if market isn’t competitive, could lead to higher prices to consumer… monopoly power

Question 5

What are costs to employees of a monopsony market?

Answer 5

Loss of revenue and profit could lead to job losses, unmotivated workforce, unproductive workforce

Question 6

What are the benefits of a monopsony market to the monopsonist?

Answer 6

Higher profits, (Amazon as an example) as can buy at lower prices. Lower costs of production is buys are lower.

Question 7

What are the benefits of a monopsony market on suppliers?

Answer 7

Guaranteed customer, potentially if market is volatile this is a good ting

Question 8

What are the benefits of a monopsony market to customers?

Answer 8

Is monopsonist can get lower prices, this can lead to lower prices for consumers… increases consumer surplus

Question 9

What is a bilateral monopsony?

Answer 9

When a monopoly and monopsony exist in the same market