3.4.6 - Monopsony Flashcards
When Does A Monopsony Occur?
Occurs when there is a single buyer in the market.
What Are Examples Of Monopsony’s?
(4 Points)
~ NHS.
~ Teachers.
~ Supermarkets.
~ Government.
What Is A Monopsonist?
A firms which has monopsony power.
How Can We Measure Monopsony Power?
By looking at wages and then comparing it to the MRP.
What Are Benefits To Firms Of Monopsony Power?
Reduced costs of production means higher profits.
What Are Drawbacks To Firms Of Monopsony Power?
(3 Points)
~ Reputational damage for the way they treat their workers.
~ Conflict with suppliers due to continual price pressure.
~ In the long-run they may drive their suppliers out of business causing supply chain issues.
What Are Benefits To Employees Of Monopsony Power?
Higher profits = higher wages for the monopsonist employees.
What Are Drawbacks To Employees Of Monopsony Power?
Employees may find it hard to cope with the harsh treatments of the suppliers.
What Are Benefits To Consumers Of Monopsony Power?
Lower average costs for the firm which may result in lower prices for consumers.
What Are Drawbacks To Consumers Of Monopsony Power?
Poor quality of product.
What Are Benefits To Suppliers Of Monopsony Power?
(2 Points)
~ Supplying to a well-known monopoly may enhance the suppliers reputation and increase sales volume.
~ Opens new opportunities.
What Are Drawbacks To Suppliers Of Monopsony Power?
Suppliers may be driven out of the business.
What Are The Characteristics Of Monopsonist’s?
(3 Points)
~ Wage makers.
~ Maximise the revenue from workers by hiring up to when MRP = MCL.
~ They decrease employment and wages.
What Is The Efficient Employment Decision?
MRP = MCL
On A Monopsony Graph, What Is The Supply Of Labour Equal To?
ACL = Wage.
