Theme 3: Monopsony

Question 1

What are the two features of monopsony/ monopsony power?

Answer 1

1. When there is only one buyer in the market or some level of monopsony power
2. can control the price/wage.

Question 2

What effect does monopsony power have?

Answer 2

Lower prices which reduces costs which means they can maximise profits.

Question 3

Draw a minimum wage diagram

Answer 3

Question 4

Draw a maximum wage diagram

Question 5

What are trade unions?

Answer 5

A group of workers who collectively bargain to improve employee welfare.

Question 6

What is geographical immobility?

Answer 6

Workers struggle to move to different areas.

Question 7

Why might a person suffer from geographical immobility?

Answer 7

• Family ties
• Expensive
• Time consuming

Question 8

What is the issue of geographical immobility

Answer 8

Labour market failure as resources are not being used efficiently

Question 9

How does the government intervene to correct geographical immobility?

Answer 9

• Relocation subsidy
• transport eg HS2

Question 10

What is occupational immobility?

Answer 10

Workers cannot move between different jobs because they lack the skills needed.

Question 11

How does the government intervene to fix occupational immobility?

Answer 11

1. Education
2. Training
3. Apprenticeships