A Pure Monopsony Buyer of a Resource Has a Marginal

question 143

Essay

A pure monopsony buyer of a resource has a marginal value curve for the resource expressed as:
MV = 100 - 0.4Q.
Its marginal and average expenditure functions are:
ME = 20 + 0.023Q
AE = S = 20 - 0.011Q.
Compute the deadweight loss that results when the firm acts to maximize profit (that is, takes advantage of its monopsony power). Also, calculate the coefficient of monopsony power that this firm possesses and the elasticity of supply of the resource.

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Definitions:

Active Communication

A method of exchanging information where both parties are fully engaged, listening, and responding thoughtfully.

OD Change Agent

A company’s formal change agent; often an outside consultant who specializes in planned change or organizational development (OD).

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Lewin Change Model

A model describing organizational change through three stages: unfreezing, changing, and refreezing.