Certified Professional Contract Manager (CPCM) 2025 – 400 Free Practice Questions to Pass the Exam

A monopsony market is defined by the presence of a single buyer that makes purchasing decisions, significantly impacting the prices and terms of purchasing goods or services from various sellers. This unique structure allows the sole buyer to exert considerable influence over the market dynamics because suppliers have limited options for selling their products.

In contrast, the other options highlight characteristics of different market structures. For instance, having many buyers for a single product suggests a competitive market, not a monopsony, where multiple buyers interact with numerous suppliers. Competing solely on price typically pertains to perfect competition or other competitive environments rather than a monopsony, where the focus is primarily on a single buyer's power. Lastly, a few dominant suppliers indicate an oligopoly rather than a monopsony, where the seller's market presence is significant but does not define the monopsony itself. Therefore, the essence of a monopsony resides in having only one buyer in the market, shaping the entire procurement landscape.