Monopsony

Question 1

What can NetworkRail do to railway track prices?

Answer 1

Push down price of railway tracks, no choice to accept

Question 2

What is the impact of purchasing economies of scale (EoS) on big firms?

Answer 2

Big firms can negotiate low prices to maximise profits

Question 3

Which supermarkets are known to collude and offer low prices?

Answer 3

• Tesco
• Asda
• Sainsburys
• Morrisons
• Waitrose
• Aldi
• M&S

Question 4

What type of labour was prevalent in Northern England’s monopsonistic coal mines?

Answer 4

Unskilled labour

Question 5

How many miners, cleaners, and unskilled labourers experienced wage suppression?

Answer 5

2.5 million

Question 6

What did the government set to address wage suppression?

Answer 6

National Minimum Wage (NMW)

Question 7

What was the minimum wage for under 18s in 2017?

Answer 7

£4.05

Question 8

What was the minimum wage for over 25s in 2017?

Answer 8

£7.50

Question 9

What happens when the government sets wages above equilibrium?

Answer 9

Creates excess supply leading to unemployment

Question 10

What effect does a higher wage have on quantity demanded?

Answer 10

Reduces quantity demanded

Question 11

What does the National Minimum Wage prevent?

Answer 11

Wage from dropping below the set minimum

Question 12

What is a consequence of being stuck in wage disequilibrium?

Answer 12

Unemployment remains

Question 13

What is a characteristic of Amazon’s work environment?

Answer 13

Employees pushed to meet hard deadlines

Question 14

What is the role of trade unions?

Answer 14

Collective bargaining to improve employee welfare

Question 15

How many teachers are in the National Union of Teachers?

Answer 15

400,000 teachers

Question 16

What can the National Union of Teachers threaten to do?

Answer 16

Strike, leading to educational disruptions

Question 17

What was the British Medical Association’s action in 2016?

Answer 17

Strike outside Department of Health for better contracts

Question 18

How much does Google’s CEO make in 50 minutes?

Answer 18

As much as an average British citizen makes in a year

Question 19

What did Corbyn propose regarding worker wages?

Answer 19

Set a national maximum wage below equilibrium wage

Question 20

What is the argument for a maximum wage?

Answer 20

To reduce income inequality

Question 21

What does setting a maximum wage below equilibrium create?

Answer 21

Excess demand or a shortage

Question 22

What happens to the quantity demanded when wages are lower?

Answer 22

Increases because workers are cheaper to hire

Question 23

What happens to the quantity supplied when wages are lower?

Answer 23

Decreases as skilled workers are less willing to work

Question 24

What can a maximum wage lead to in terms of government spending?

Answer 24

Reduces government spending

Question 25

What did Thatcher observe about X-inefficiency?

Answer 25

£200 million from taxpayers to subsidise mines

Question 26

What was the result of Thatcher shutting down the mines?

Answer 26

140,000 miners lost their jobs

Question 27

What does occupational immobility mean?

Answer 27

Workers can’t find work due to lack of necessary skills

Question 28

What type of unemployment is caused by shifts in industry?

Answer 28

Structural unemployment

Question 29

How can the government intervene in cases of occupational immobility?

Answer 29

Through education and training schemes

Question 30

What is geographical mobility?

Answer 30

Workers struggle to move between different areas

Question 31

What can relocation subsidies help with?

Answer 31

Cover the cost of moving for jobs

Question 32

What announcement did Jeremy Hunt make regarding junior doctors' working hours in 2016?

Answer 32

Longer working hours (7am-10pm) and cutting overtime pay

Question 33

What was the hourly pay cut for junior doctors announced in 2016?

Answer 33

£12 an hour

Question 34

What percentage of the UK healthcare market does the NHS control?

Answer 34

Over 90%

Question 35

What is the consequence for junior doctors if they do not accept the new pay and hours?

Answer 35

They will go unemployed

Question 36

What is a monopsony?

Answer 36

A market structure where there is only one buyer

Question 37

How does a monopsony affect wages?

Answer 37

It can negotiate lower wages

Question 38

Are pure monopsonies common?

Answer 38

Very rare

Question 39

What is an example of a monopsony in the healthcare sector?

Answer 39

Private healthcare

Question 40

Who is a dominant buyer in the context of controlling wages for teachers?

Answer 40

Government