Lesson 3.4.6
3.4.6 Monopsony Quiz: Pearson Edexcel Economics, Unit 3
20 questions
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Lesson 3.4.6, Monopsony: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 3: Theme 3: Business behaviour and the labour market, written with Revision Ninja.
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The 20 questions
-
What is the defining characteristic of a monopsony market?
- Single dominant buyer
- Zero entry barriers
- Many small buyers
- Single dominant seller
-
What shape is the labour supply curve facing a monopsonist firm?
- Downward sloping
- Vertical line
- Upward sloping
- Perfectly elastic
-
How does a monopsonist's wage rate compare to the competitive market equilibrium wage?
- It is lower
- It is higher
- It is zero
- It is identical
-
Why does marginal factor cost exceed the wage rate for a monopsonist?
- Taxes increase sharply
- Fixed costs double
- Productivity falls rapidly
- Wages increase overall
-
What is the main impact of monopsony power on employment levels?
- Maximum employment
- Higher employment
- Lower employment
- Unchanged employment
-
Labour supply is W = 4 + 0.5L, so total labour cost is 4L + 0.5L^2 and MFC = 4 + L. If MRP is £20, what wage does the monopsonist pay?
- £12
- £20
- £8
- £16
-
What is a major benefit to a firm with monopsony power in a labour market?
- Higher labour mobility
- Lower worker productivity
- Lower wage costs
- Increased competition
-
Which government policy is used to counter monopsony power in a labour market?
- Deregulation
- Minimum wage
- Maximum price
- Corporate tax
-
At what point does a profit-maximising monopsonist choose its level of employment?
- Wage equals MRP
- MFC equals MRP
- Supply equals demand
- Wage equals MFC
-
Which employer is a classic real-world UK example of a monopsony?
- Tesco
- British Airways
- Barclays
- NHS
-
Compared to a competitive labour market, how does a monopsony affect wages?
- Leaves wages unchanged
- Increases wages
- Maximises wages
- Reduces wages
-
What is the defining characteristic of a monopsony market structure?
- Single seller
- Free entry
- Many buyers
- Single buyer
-
Why is the marginal factor cost higher than the wage rate for a monopsony?
- Decreasing total product
- Lower fixed costs
- Constant marginal revenue
- Higher wage for all
-
Which stakeholder group gains the main benefit from a monopsony labour market?
- Consumers
- Suppliers
- Employers
- Workers
-
What is a risk of setting a minimum wage too high in a monopsony market?
- Increased job vacancies
- Higher unemployment
- Higher firm profits
- Lower product prices
-
If MFC is 10 + 2L and MRP is 40, what is the monopsonist's employment level?
- 30 workers
- 20 workers
- 10 workers
- 15 workers
-
If labour supply is W = 10 + L and MRP is 40, what is competitive employment?
- 25 workers
- 40 workers
- 30 workers
- 15 workers
-
How does introducing a minimum wage affect a monopsonist's marginal cost of labour?
- Shifts it right
- Makes it horizontal
- Doubles its gradient
- Makes it vertical
-
Which real-world factor can offset monopsony power in a labour market?
- Low mobility
- Trade unions
- High sunk costs
- Imperfect information
-
Compared to a competitive market, what effect does monopsony usually have on employment?
- Restricts employment
- Increases employment
- Eliminates unemployment
- Doubles employment
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