Economics • Economic BasicsEasy
What does 'Monopsony' refer to in market structures?
A. A market characterized by a single buyer and multiple sellers.✓ Correct Answer
B. A market with one seller and many price-taking buyers.
C. A situation where two dominant firms control the entire market share.
D. A market containing numerous buyers and sellers dealing in differentiated products.
💡 Solution & Explanation
A monopsony defines a market structure characterized by a single dominant buyer facing numerous independent sellers, giving the buyer substantial market power over input prices. This contrasts with a monopoly where a single seller controls the supply side, or an oligopoly featuring a small group of competing firms.
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