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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Definitions:

Rationality

The quality of being based on or in accordance with reason or logic; decision-making that aims to optimize outcomes.

Creative Imagination

The capacity to generate innovative ideas, solutions, or artistic expressions.

Judgment

The ability to make considered decisions or come to sensible conclusions.

Solution Finding

The process of identifying and implementing ways to solve a problem or address a specific challenge.