Asked by Anissa Hoyte on Jun 10, 2024

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For a monopsony buyer, the marginal expenditure per unit of an input:

A) exceeds the average expenditure per unit.
B) is less than the average expenditure per unit.
C) equals the average expenditure per unit.
D) any of the above could be true.

Monopsony Buyer

A market condition where there is only one buyer for many sellers, giving the buyer significant control over prices.

Marginal Expenditure

The increase in cost that arises when buying an added unit of a product or service.

Average Expenditure

The average amount spent per unit of a good or service.

  • Examine the contrasts in market authority between monopoly and monopsony.
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Verified Answer

JS
James SlaightJun 16, 2024
Final Answer :
A
Explanation :
In a monopsony, where there is only one buyer for a particular input, the marginal expenditure per unit exceeds the average expenditure per unit. This is because to purchase an additional unit of the input, the monopsonist often has to pay a higher price for all units purchased, not just the additional unit, due to the upward-sloping supply curve they face.