A Soybean Processor Has Monopsony Power Over Farmers

question 3

Multiple Choice

A soybean processor has monopsony power over farmers. To maximize profit, how should it adjust purchases relative to the competitive level?

• A) It should depress purchases below the equilibrium of perfect competition.
• B) It should purchase the quantity where marginal revenue equals marginal cost.
• C) It should purchase the quantity where marginal benefit equals marginal expenditure.
• D) None of the above.

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