Question

What is a monopsony? Discuss its characterisics; when would a monopsony firm be in equilibrium?

What is a monopsony? Discuss its characterisics; when would a monopsony firm be in equilibrium?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Monopsony is a market condition in which there is only one buyer. It is also referred to as buyer's monopoly. In monopsony the large buyer forces the prices to fall.

The characteristics of monopsony are:

1. There is a single firm which purchases all the output in a market.

2. There are no other buyers.

3.There are restrictions on the entry of other buyers in the industry.

Equilibrium in monopsony:

In monopsony the profit maximizing quantity of labor is the quantity at which marginal revenue productivity of labor is equal to the marginal factor cost. The wage rate at which the firm can obtain the equilibrium quantity of labor is known as the equilibrium wage.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose you manage a firm, which is a monopsony in the labor market and a monopoly...
Suppose you manage a firm, which is a monopsony in the labor market and a monopoly in the product market. Suppose another firm moves into your market, hiring from the same pool of workers and selling an identical product to the same set of customers. Use the model of monopsony to analyze the impact of the new firm on the quantity of output you produce (Q), the price your firm should charge (P), the quantity of workers you employ (L),...
. Suppose that firm A is a monopsony that demands labor and XYZ Union is a...
. Suppose that firm A is a monopsony that demands labor and XYZ Union is a monopoly that provides labor. Other things constant, the equilibrium wage and quantity of labor will depend on what factor?
Discuss what happens to the equilibrium price and quantity of Colgate Toothpaste when there is a...
Discuss what happens to the equilibrium price and quantity of Colgate Toothpaste when there is a decrease in the supply of Colgate Toothpaste but no change in the demand. What could cause a decrease in the supply of Colgate Toothpaste but no change in demand?
Assume that the labor market is in a monopsony. The equilibrium is determined by _______. a....
Assume that the labor market is in a monopsony. The equilibrium is determined by _______. a. Marginal Cost of Hiring b. Marginal Cost of Hiring & Demand c. Marginal Cost of Hiring & Supply d. Marginal Cost of Hiring & Supply & Demand 2. Assume that the labor market is a monopsony. As the minimum wage increases, the employment _______. a. remains constant → decreases → increases b. remains constant → increases → decreases c. increases → decreases → remains...
Players tend to unionize when facing a monopsony in an attempt to Select one: a. Keep...
Players tend to unionize when facing a monopsony in an attempt to Select one: a. Keep out lower quality talent willing to play for a lower wage b. Monopolize the sale of talent, thereby creating a bilateral monopoly. c. Invite competition and undermine the monopsony d. Pay for lengthy antitrust lawsuits against the league
Assume that a monopsony firm and a perfectly competitive labor market. Contrast the two with respect...
Assume that a monopsony firm and a perfectly competitive labor market. Contrast the two with respect to (a) wage rate, (b) employment level, and (c) profit maximization condition. Since both monopolists and competitive firms follow the MFC = MRC rule in maximizing profits, how do you account for the different results? Why might the labor supply of a perfectly competitive firm and those of a monopolist be different? What are the implications of such a difference? Show your discussions graphically.
When would a firm choose to operate on a transnational basis? Under what circumstances would a...
When would a firm choose to operate on a transnational basis? Under what circumstances would a firm use a localization strategy? When would an International strategy be employed? When would a firm operation a global standardization strategy? Support your answers with examples.
Discuss when horizontal analysis would be most beneficial. Discuss when vertical analysis would be most beneficial....
Discuss when horizontal analysis would be most beneficial. Discuss when vertical analysis would be most beneficial. Discuss when ratio analysis would be most beneficial.
Explain how a monopsony market structure us affected by a price floor and what is the...
Explain how a monopsony market structure us affected by a price floor and what is the effect of the monopsony on the local economy?
1. A monopsony has market power and will pay ________ wages than a(n) ________ labor market...
1. A monopsony has market power and will pay ________ wages than a(n) ________ labor market will pay. A. more; competitive B. more; noncompetitive C. less; competitive 2. When a union in the U.S. is able to sell its labor to for-profit businesses, those business must ________. A. pay wages exactly where the demand and supply labor curves intersect B. pay wages below the market equilibrium for wages C. pay wages matching the preferred equilibrium wage chosen by these businesses...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT