Question

In a market structure in which there are only few buyers ________. 
 

• A. Monopsony
• B. Oligopsony
• C. monopolistic competition
• D. Oligopoly

Hint:

Remember the roots of these terms: - "-poly" = Seller (e.g., Monopoly = 1 seller, Oligopoly = few sellers).
- "-psony" = Buyer (e.g., Monopsony = 1 buyer, Oligopsony = few buyers).

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
Market structures are classified based on the number of buyers and sellers, which determines their level of market power and influence over prices.
Detailed Explanation:
Let us define the economic terms used in the options:
- Oligopsony (B): A market structure characterized by a few large buyers who purchase from many sellers.
Because there are only a few buyers, each buyer possesses significant market power and can influence the prices and terms of the goods they purchase. This structure is common in agriculture, where a few large food processing companies buy raw crops from many independent farmers.
- Monopsony (A): A market structure with only one buyer who has complete control over the market price.
- Oligopoly (D): A market structure characterized by a few sellers who dominate the market.
- Monopolistic Competition (C): A market structure characterized by many sellers offering differentiated products.

Step 2: Final Answer:
A market structure with only a few buyers is called an Oligopsony.