4.4 Imperfectly competitive labour markets

Question 1

Define Monopoly

Define Monopsony

Answer 1

Monopoly - one single seller

Monopsony - one single buyer

Question 2

What is monopsony power?

Answer 2

The market power exercised in a market by the buyer or the services of a factor of production, i.e labour, even though the firm is not a pure monopsonist.

Question 3

What are the feature of a pure monopsonistic labour market?

Answer 3

• There is only one firm or employer available to hire their services
• Workers cannot choose between alternative employment
• HOWEVER, this is extremely rare
• Nevertheless, many large firms exercise a high degree of monopsony power in labour market

Question 4

What is occupational immobility of labour?

Answer 4

When workers are unwilling or unable to move from one type of job to another e.g because different skills are needed.

Question 5

What is geographical immobility of labour?

Answer 5

When workers are unwilling or unable to move from one area to another in search of work.