Question

The market situation wherein all the sugarcane farmer-producers are bound to supply their produce to a farmer's co-operative sugar factory in that area is known as:

• A. Oligopoly
• B. Oligopsony
• C. Monopoly
• D. Monopsony

Hint:

Exam Tip: The root words help:
Mono = One, Poly = Many, Oligo = Few.
Monopsony = Single Buyer.
Monopoly = Single Seller.
For the sugarcane example, farmers (sellers) have no choice but to sell to one buyer, giving the buyer immense market power.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
This question tests the classification of market structures based on the number of buyers (demand side). We need to analyze who the buyer is and how many buyers exist.

Step 2: Defining Market Structures based on Buyers:

• Monopoly: A market with a single seller.
• Monopsony: A market with a single buyer.
• Oligopoly: A market with a few large sellers.
• Oligopsony: A market with a few large buyers.

Step 3: Analyzing the Scenario:
The scenario describes a situation where:

• The sellers are the sugarcane farmer-producers. There are many of them.
• The buyer is a single farmer's co-operative sugar factory. All farmers are bound to supply their sugarcane to this one factory.
This means there is only one buyer for the sugarcane.
A market with a single buyer is defined as a monopsony.

Step 4: Final Answer:
The market situation is a monopsony. Therefore, option (D) is correct.