Economics • Economic BasicsEasy
Which of the following best defines 'Monopsony'?
A. A market with many buyers and a single seller.
B. A market with a single buyer and many sellers.✓ Correct Answer
C. A market with only two sellers dominating the industry.
D. A market with differentiated products and free entry.
💡 Solution & Explanation
A monopsony defines a market structure characterized by a single buyer facing multiple competing sellers, giving the buyer significant market power over pricing and quantity. This contrasts with a monopoly, which features a single seller and many buyers. Oligopsony involves a small number of buyers controlling purchases within an industry. This economic concept frequently appears in questions concerning market structures and imperfect competition.
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