QUESTION 1 1. What is the effect on the equilibrium level of input if a monopolist faces a monopsonist in the same input market? Justify your answer clearly. (6 marks) 2. Let a competitive market has the followings: a) Competitive firms sell output for the price of: P=40 b) Marginal productivity per hour of labour is MP = 80 - L How many labour the firm can hire if the wage is 50? (5 marks) 3. Suppose that we are at an allocation where MRS, = 2 > MRS" = 1. Both of consumers Q and T consume x and y. Can we make both consumers better off without hurting anyone? Justify your answer. (4 marks) 4. Does efficiency in production mean efficiency in exchange? Explain your answer clearly