Monopsony

Question 1

Monopsony def.

Answer 1

there is only one buyer in the market

Have high bargaining power so get lower prices from supplier e.g. Supermarkets with farmers, or NHS buying medication

They produce at MC=AR

Question 2

Pros & Cons of a monopsony (firms, consumers, employees, suppliers)

Answer 2

Firms - huge profits for shareholders, purchasing EoS

Consumers - could benefit from low prices if low costs are passed on to consumers

Employees - Monopsonists may pay higher wages due to higher profits

Suppliers - Recieve low prices for their goods