Examkin

Soru

Zorluk: OrtaMonopsony and Other Buyer-Dominated Market Structures

A major agricultural processing firm operates as the sole buyer of cocoa beans in a rural region. In profit-maximizing equilibrium, how do the prices paid to farmers and the quantity of cocoa purchased by this monopsonist compare to outcomes in a competitive market?

  1. Both the price paid to farmers and the quantity purchased are lower.Cevap
  2. B
    The price paid to farmers is higher, but the quantity purchased is lower.
  3. C
    The price paid to farmers is lower, but the quantity purchased is higher.
  4. D
    Both the price paid to farmers and the quantity purchased are higher.

Cevap

Both the price paid to farmers and the quantity purchased are lower in a monopsonistic market than in a competitive market.
Because a monopsonist is the sole buyer, its Marginal Factor Cost (MFCMFC) exceeds the market supply price (AFCAFC). To maximize profit, it equates MFCMFC with Marginal Revenue Product (MRPMRP), resulting in both a restricted quantity purchased and a depressed price paid to sellers compared to competitive market equilibrium.

Adım Adım Çözüm

1
Identify the market structure and supply conditions.
The firm is a monopsony (sole buyer). It faces an upward-sloping supply curve for the input, meaning to buy more units, it must increase the price for all units bought.
Because the supply curve slopes upward, the Marginal Factor Cost (MFCMFC) lies above the Supply curve (Average Factor Cost, AFCAFC).
2
Determine the profit-maximizing purchasing decision.
The firm sets quantity where MFC=MRPMFC = MRP (Marginal Revenue Product), purchasing quantity QmQ_m, which is lower than competitive quantity QcQ_c (where Supply = MRPMRP).
Profit maximization requires equating the extra cost of hiring/buying one more unit with the extra revenue generated by that unit.
3
Determine the price paid to suppliers.
The firm pays the price PmP_m indicated on the supply curve for quantity QmQ_m, which is lower than the competitive equilibrium price PcP_c.
The monopsonist uses its market power to pay the lowest price suppliers are willing to accept for quantity QmQ_m.

Anahtar Kavram

Monopsony Equilibrium and Factor Price Depresssion
Tahmini Süre:1m 0s
Bu soruyu puanla

Konular

Monopsony and Other Buyer-Dominated Market Structures

Bu konudan daha fazla soru