Question

Which situation best shows low mobility of labour that increases monopsony power?

Options

• Workers freely shifting between many nearby firms

• Workers unable to move due to family ties and lack of money

• Workers quickly changing jobs using online platforms

• Workers getting government protection in all markets

Answer 1

Workers unable to move due to family ties and lack of money

Explanation: 

When workers are geographically or occupationally immobile, they cannot easily leave the single employer, which strengthens the monopsonist’s power.