1) 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.

2) A firm's demand curve is given by P = 500 - 2Q. The firm's current price is $300 and the firm sells 100 units of output per week.

a. Calculate the firm's marginal revenue at the current price and quantity using the expression for marginal revenue that utilizes the price elasticity of demand.

b. Assuming that the firm's marginal cost is zero, is the firm maximizing profit?