When there is only one buyer and one seller of product, it is called _____ situation economics cbse
Answers
monopoly means single seller and monopsony means single buyer..
Answer: Bilateral monopoly.
Explanation:
Bilateral monopoly is a situation where there is only one buyer and seller of a product. It refers to a market structure featuring both a Monopoly and Monopsony.
Monopoly refers to single seller and Monopsony to sole buyer. Bilateral monopoly requires the seller and the buyer who have diametrically opposite interests to achieve a balance of their interests.
To explain the scenario let`s take an example of a trade union which is the sole supplier of labor( monopolist) in a town and a single entity which is the only employer of labor ( monopsonist).
In the above situation the sole supplier of labor tries to charge high rates for the labor whereas the lone buyer of the labor tries to pay less for employing them. As both the parties have their own interest,they both need to negotiate depending upon their bargaining power.
Hope this helps.