Question C2: The London School of Economics is the only institution that hires a highly-specialized input in the city of London. It is thus a monopsony. The inverse demand function wa = 40000 – 100x. The inverse supply function is ws = 10000 + 100x. In both functions, x is the quantity of inputs hired. What wage will the firm pay them (half the points)? What is the supply elasticity at that point (half the points)?
