Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The ability of employers to set wages lower than the market rate
B
The ability of employees to negotiate higher wages
C
The government's influence over wage levels
D
The impact of competition among employers for workers
Understanding the Answer
Let's break down why this is correct
Answer
In a monopsony labor market, 'buyer power' refers to the ability of a single employer to control the wages and working conditions because they are the only major source of jobs in that area. This means that workers have fewer options for employment, so the employer can offer lower wages since many people will still want to work there. For example, if a small town has only one factory, that factory can set its pay lower than what workers might earn elsewhere since there are no other nearby job opportunities. The workers may want to negotiate for better pay, but the employer knows they have the upper hand in this situation. This imbalance can lead to lower overall wages and less favorable conditions for workers in that market.
Detailed Explanation
Buyer power means employers can pay less than what workers might earn elsewhere. Other options are incorrect because This suggests workers can easily ask for more money; This implies the government controls wages.
Key Concepts
buyer power
Topic
Monopsony in Labor Markets
Difficulty
easy level question
Cognitive Level
understand
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