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Monopsony – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is a Monopsony? A competitive labor market is one where there are many potential employers for a given type of worker, say a secretary or an accountant. Suppose there is only one employer in a labor market. Because that employer has no direct competition in...

Labor Market Power of Employers

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How do Employers Have Labor Market Power? How does market power by an employer affect labor market outcomes? Intuitively, one might think that wages will be lower than in a competitive labor market. Let’s prove it. We will tell the story for a monopsonist, but the...

Supply and Demand in Financial Markets

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is Supply and Demand in Financial Markets?In any market, the price is what suppliers receive and what demanders pay. In financial markets, those who supply financial capital through saving expect to receive a rate of return, while those who demand financial...

Market Competition and Innovation

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How does Market Competition Affect Innovation?Market competition can provide an incentive for discovering new technology because a firm can earn higher profits by finding a way to produce products more cheaply or to create products with characteristics consumers...

New Technology and Positive Externalities

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How does New Technology give rise to Positive Externalities?Will private firms in a market economy underinvest in research and technology? If a firm builds a factory or buys a piece of equipment, the firm receives all the economic benefits that result from the...
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