Practice Questions
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What is the primary difference between a monopsony and a monopoly?
A monopsony has one buyer and many sellers. Other options are incorrect because This option mixes up the roles; This option suggests they are the same...
How does a monopsony affect wage levels compared to a competitive market, and what are the potential policy implications of this difference?
In a monopsony, there is only one big employer. Other options are incorrect because Some might think a monopsony raises wages, but it actually lowers ...
In a monopsony, how does the labor market equilibrium differ from that in a competitive market, and what role can government intervention play in this context?
In a monopsony, there is only one buyer for many workers. Other options are incorrect because This answer confuses monopsony with a competitive market...
Which of the following scenarios best illustrates a monopsony in the labor market, highlighting the advantages for buyers compared to a monopoly situation?
In a small town, one employer hires all the workers. Other options are incorrect because This describes a monopoly, where one seller controls prices; ...
How does the existence of a monopsony affect wage levels compared to a competitive market, and what are the policy implications of this difference when compared to a monopoly?
In a monopsony, there is only one buyer for labor. Other options are incorrect because This option suggests that monopsonies lower wages but focuses o...
What best defines a monopsony in economic terms?
A monopsony is when one buyer controls the market. Other options are incorrect because This option suggests many buyers and one seller; This option de...
Which of the following is a characteristic of a monopsony in labor markets?
In a monopsony, there is only one main buyer of labor. Other options are incorrect because Some might think many buyers mean a monopsony; It's easy to...
What is a defining characteristic of a monopsony in the labor market?
In a monopsony, there is one buyer for labor and many workers. Other options are incorrect because This option suggests there are many buyers and sell...
A local grocery store is the only employer in a small town, paying workers significantly less than the market wage due to the lack of alternative job options. Which category best describes this situation?
A monopsony is when there is only one buyer for something. Other options are incorrect because Perfect competition means many buyers and sellers; An o...
Monopsony is to labor market as monopoly is to _____?
A monopoly controls the product market. Other options are incorrect because Some might think of capital as money, but it’s not the same as products; W...
If a monopsonist reduces the wages it offers to workers, what is the likely effect on the overall employment level in that market?
When a monopsonist lowers wages, workers may look for better jobs elsewhere. Other options are incorrect because Some might think that lower wages mea...
In a monopsony, the single buyer's ability to set wages often results in the marginal revenue product of labor for the last worker hired to __________ compared to a competitive market.
In a monopsony, the single buyer has more power. Other options are incorrect because Some might think wages increase in a monopsony; It's a common mis...
Order the following steps in understanding the impact of a monopsony on labor markets: A) Monopsonist sets wage lower than competitive market, B) Workers have fewer employment options, C) Employment levels decrease, D) Monopsonist gains market power.
A monopsonist is a single buyer of labor. Other options are incorrect because This option suggests workers have options first; This option starts with...
In a monopsony market, which of the following statements are true regarding the effects on labor and wages? Select all that apply.
Other options are incorrect because Some might think workers earn less in a monopsony; It's a common mistake to think a monopsonist can raise wages....
In a monopsony, how does the single buyer's market power affect wages compared to a competitive market?
In a monopsony, there is only one buyer for workers. Other options are incorrect because Some might think wages stay the same as in competitive market...
In a monopsonistic labor market, what is the likely effect on wages when the monopsonist decides to hire an additional worker?
When a monopsonist hires more workers, they may lower wages if the extra worker's value is less than what they pay. Other options are incorrect becaus...
In a small town, there is only one major employer, a factory that produces shoes. The factory has significant control over the wages it pays its workers due to the lack of alternative job opportunities in the area. If the factory decides to lower wages, what is the likely impact on the workers and the overall labor market in this town?
Workers may feel they have no choice but to accept lower pay to keep their jobs. Other options are incorrect because Some might think workers will ask...
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