Which market structure features only one buyer in the marketplace?

The correct answer is defined as a market structure characterized by a single buyer facing multiple sellers. This scenario creates a unique dynamic in which the single buyer holds significant power over the market, primarily influencing prices and conditions of purchase due to lack of competition among buyers.

In a monopsony, the buyer has considerable control over the market because they can dictate terms, manipulate supply, and potentially set prices much lower than what might prevail in a more competitive environment. This contrasts with other market structures where there are either multiple buyers or sellers, distributing the market power more evenly.

For instance, in a monopoly, there is only one seller and multiple buyers, leading to the seller exerting influence over prices. In an oligopoly, there are a few sellers who can collaborate or compete among themselves, affecting market prices and output. Perfect competition involves many sellers and buyers where no individual buyer or seller has control over the market prices. Understanding these distinctions helps clarify how monopsony operates uniquely compared to these other structures.