Question

Which statement correctly describes monopsony?

Options

• Many buyers and many sellers with homogeneous product

• Two dominant sellers closely watching each other

• Single buyer and many sellers in a factor market

• Single seller and many buyers with no close substitutes

Answer 1

Single buyer and many sellers in a factor market

Explanation:

Monopsony is a market with one powerful buyer and many sellers, often seen in labour or input markets where the buyer can influence the price it pays.