The employment of teaching assistants (TAs) by major American universities can be characterized as a monopsony. Suppose
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Question:
The employment of teaching assistants (TAs) by major American universities can be characterized as a monopsony. Suppose the demand for TAs is W = 60 000 - 250 n, where W is the wage (as an annual salary) and n is the number of TAs hired. The supply of TAs is given by W = 2 000 + 75 n.
a) If a university takes advantage of its monopsonist position, how many TAs will it hire? What wage will it pay? What is the cost of this monopsony to the society?
b) If, instead, the university faced an infinite supply of TAs at the annual wage level of $ 10,000, how many TAs would it hire?
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