Question

Which example best represents a monopsony in the labour market?

Options

• Many IT firms are hiring programmers in a big city

• One large mining company employing most workers in a small village

• Several supermarkets buying vegetables from many farmers

• Many schools hiring teachers in a metro city

Answer 1

One large mining company employing most workers in a small village

Explanation:

A single large mine in a small area hiring most local workers is a classic case of one employer facing many workers, showing monopsony power.