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single buyer - takes advantage of sellers  

  • oligopsony - market w/ only a few buyers
  • monopsony power - lets buyer pay less than market price for a good
  • marginal value - additional benefit from purchasing another good
  • marginal expenditure - additional cost from purchasing another good
    • E = expenditure = P(q)q
    • but P(q) in this case set by supply curve, not demand curve
    • AE = avg expenditure = P(q)
  • quantity bought found at intersection of demand curve and marginal expenditure
    • price found by dropping down to corresponding price on supply curve


  • demand
  • supply, avg expenditure, P(q)
  • marginal expenditure
  • p* = market price

degree of monopsony power - depends on # of buyers, interaction between buyers  

  • fewer buyers >> supply becomes less elastic >> more monopsony power
  • buyers compete less >> more monopsony power
  • more elastic supply >> markdown (p-p*) will be less

surplus - works out just opposite of monopoly  

  • deadweight loss from smaller quantity desired by buyer(s)
  • producer surplus lost >> increase in consumer surplus
Subject X2: 

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