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?

This situation best describes a monopsony, which is a market condition where there is only one buyer—in this case, the grocery store is the only employer in the town. Because workers have no other job options, the grocery store can pay them lower wages than they would earn elsewhere. This creates an imbalance of power, where the employer can dictate terms without competition from other businesses. For example, if the market wage for grocery store workers is $15 an hour, but the store only pays $10 because they know workers cannot find jobs elsewhere, this shows how a monopsony affects wages. Overall, the lack of alternative employment opportunities allows the grocery store to exploit its position and pay less than what workers deserve.