Which term describes a market condition with a single buyer and many sellers?

Which term describes a market condition with a single buyer and many sellers?

• A. Oligopoly
• B. Monopolistic Competition
• C. Monopoly
• D. Monopsony

Answer: (D)

Monopsony is the market structure described when there is one buyer and many sellers. With a single purchaser, that buyer has significant influence over the price and terms because all sellers must compete for that buyer’s demand. As a result, the price paid to sellers tends to be lower than in a perfectly competitive market, since no individual seller can influence the price on their own. This contrasts with a monopoly (one seller), oligopoly (a few sellers), and monopolistic competition (many sellers offering differentiated products). A real-world example would be a large employer or a government entity that is the sole major buyer of a particular input in a region. In short, the defining setup—one buyer, many sellers—fits monopsony precisely.

Monopsony is the market structure described when there is one buyer and many sellers. With a single purchaser, that buyer has significant influence over the price and terms because all sellers must compete for that buyer’s demand. As a result, the price paid to sellers tends to be lower than in a perfectly competitive market, since no individual seller can influence the price on their own. This contrasts with a monopoly (one seller), oligopoly (a few sellers), and monopolistic competition (many sellers offering differentiated products). A real-world example would be a large employer or a government entity that is the sole major buyer of a particular input in a region. In short, the defining setup—one buyer, many sellers—fits monopsony precisely.