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Sagot :
As the food manufacturer is a monopsony in his town, when Berry writes a counter wage offer, "the firm will reject Berry's counter salary number and hire someone else".
What is meant by monopsony?
Monopsony is a market strategy where there is just one buyer, according to economic theory. A company that is the only employer in a small town is an example of pure monopsony. A business in this situation is able to provide lower wages than it otherwise might.
The characteristics of monopsony are-
- One company consuming all output in a market,
- No other customers, and
- Barriers to entry.
The monopsony work with the principle of-
- When a company enjoys market dominance when using factors of production, it is said to be in a monopsony (e.g. labour).
- There is only one buyer and many sellers in a monopsony. It frequently refers to an employer with market dominance over employee recruiting, or a monopsony.
- The idea behind monopsony, where there is only one vendor and numerous purchasers, is comparable to this.
To know more about market dominance and marketing strategy, here
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