Monopsony

Question 1

Characteristics

Answer 1

Profit maximisers

Same as a monopolistic market

Question 2

Where will a monopsony seek to buy at?

Answer 2

0E because they are the only buyer in the market hey can. In a perfectly competitive market it would buy at a higher price. However suppliers will not be happy with this so the quantity will drop.

Question 3

What does the upward sloping supply curve mean

Answer 3

Monopsonists will have to pay a higher price if they want more. The MC of buying more is higher than the average price.

Question 4

How it affects the supplier

Answer 4

Likely to lose out
Price paid for good falls
Less supplied because price falls
Change markets e.g farmer grows something else

Question 5

Effect on customer

Answer 5

Lower costs lead to lower prices
Depends
May be restrictive in supply

Question 6

Bilateral monopoly

Answer 6

When a Monopsonist faces a monopoly market

Question 7

Definition and example

Answer 7

When there is only one buyer in the market

Government dominates the market for the hiring of teachers.