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Why might a firm have monopsony power even if it is not the

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1. Why will a monopolist"s output increase if the government forces it to lower its price? If the government wants to set a price ceiling that maximizes the monopolist"s output, what price should it set?

2. How should a monopsonist decide how much of a product to buy? Will it buy more or less than a competitive buyer? Explain briefly.

3. What is meant by the term "monopsony power"? Why might a firm have monopsony power even if it is not the only buyer in the market?

Reference no: EM13321689

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