A pure monophony buyer of a resource has a marginal value curve for the resource expressed as: MV = 100 - 0.4Q. Its average expenditure function (and also the market supply function) is:
AE = S = 20 + 0.011Q.
1. Identify the monopolist's profit maximizing quantity and price?
2. Calculate the deadweight loss that results when the firm acts to maximize the profit (that is, takes advantage of its monophony power).
3. Determine the index of monophony power that this firm possesses.
4. Determine the elasticity of supply of the resource.