question archive An oligopsony exists if 1
An oligopsony exists if 1
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An oligopsony exists if
1. Only a few firms produce most of the industry's output.
2. Only a few firms account for most of the industry's employment.
3. Only one firm accounts for most of the industry's employment.
4. There is no buyer concentration in the labor market.
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The answer to this question is:
2. Only a few firms account for most of the industry's employment.
The employees have a few firms where they can sell their labor. Hence, a few companies have the market power of hiring people. This situation implies that such companies are likely to keep the wages of workers low.
