Notesale: Turn your study into money

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Monopsonies
Characteristics
● In a theoretical monopsony, there is only one buyer
...
g
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● This allows the buyer to exploit sellers and ensure that they can get the best
price
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● Monopsonies often occur in the supply of labour (e
...
the NHS and
emergency medicine)
...

● Advantages: lower prices for consumers, quality might be better than if there
was perfect competition in buying resources, increased producer and
consumer surplus, monopsony power may balance out monopoly power
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Monopsonies in the labour market
● Local councils, the NHS, the Armed Forces, teaching and major supermarkets
all have buying power over potential employees
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● Monopsony employers are likely to increase wages to attract new workers
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● Trade unions attempt to raise the wage rate as they have a monopoly in the
supply of workers
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Monopsony graph (will not get explicitly tested on!)

For a monopsony employer, at each wage, the number of workers willing and able to
work is shown by the AC curve
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