Business, 11.02.2020 18:30 billybob8514

The employment of teaching assistants by major universities can be characterized as a monopsony. Suppose the demand for and supply of TAs can be characterized by the following equations: L = 100,000 – 50w. L =- 10,000 + 75w. (Demand for labor; MV) (Supply of labor; AE) where w is the wage (as monthly salary), and L is the number of TAs hired.

A. If the university takes advantage of its monopsonist position, how many TAs will it hire? What wage will it pay? What are the university's monopsony rents?
B. If, instead, the university was forced to act as a perfect competitor, how many TAs would it hire?
C. Calculate the change in consumers' surplus, the change in producers' surplus, and the deadweight loss when moving from the efficient solution to the monopsony solution.
D. Calculate the Lerner Index of Monopsony Power using two different formulas.

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