Consider a market with a monopolist buyer and a price-taking supply side.

Posted: December 30th, 2021

1. [6 points total] Consider a market with a monopsonist buyer and a price-takingsupply side. The marginal benefit curve is MB(Q) = 800-2Q and the marginalcost curve is MC(Q) = 4Q.(a) [2 points] What is formula for the inverse-supply curve, p(Q)? What isthe formula for the marginal outlay curve, MOL(Q)?(b) [4 points] What quantity does the monopsonist buy? What price doesit pay? Draw a graph and label the price, quantity, consumers’ surplus,producers’ surplus, and deadweight loss.

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