At One Point in Time, a Company Had Monopsony Power

question 15

Multiple Choice

At one point in time, a company had monopsony power in the town of Cornwall's labor market. But over time, new businesses moved to the area and the monopsony power was broken. What happened when the company lost its monopsony power?

• A)Wage rates in Cornwall decreased.
• B)Workers left the town in search of another monopsony market.
• C)Wage rates in Cornwall increased.
• D)The price of goods sold by the Cornwall company decreased.

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Definitions:

Treasury Bills

Short-term government securities issued at a discount from the face value and maturing in a year or less, representing a secure investment.

Collection Time

The typical period a business waits to receive money owed by its customers.

Weekly Disbursements

The total amount of money a business pays out in a week, covering expenses such as salaries, supplier payments, and other operational costs.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision. It represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.