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A pure monopsony buyer

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solution


Question

7. A pure monopsony buyer of a resource has a marginal value curve for the resource expressed;as: MV = 100 - 0.4Q. Its average expenditure function (and also the market supply function) is;AE = S = 20 + 0.011Q.;a. Find the monopsonist's profit maximizing price and quantity.;b. Compute the deadweight loss that results when the firm acts to maximize profit (that is;takes advantage of its monopsony power).;c. Calculate the index of monopsony power that this firm possesses.;d. Calculate the elasticity of supply of the resource.;Additional Requirements;Level of Detail: Show all work

 

Paper#15372 | Written in 18-Jul-2015

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