1. 1
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2. Case #1: Monopsonist in input purchasing and Monopolist seller of product
Equilibrium: MRP=MIC at Pt A
Pricing off input supply curve gives QMM and PMM at B
MIC
Supply of Input A
$ per unit of input
Note: Use MR not output price (PY) due to being a monopolist (I don’t display the MVP curve)
PMM B
MRP=MR x MPP
QMM 2
Amount of Input Purchased
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3. Case #2: Perfect Competition in input purchasing and Monopoly seller
Equilibrium is where MRP=Input price, PPCM
No Marginal Input Cost curve → QPCM and PPCM
Input price determined
by input market (take input price as given
$ per unit of input
PPCM
MRP=MR x MPP
QMM 3
Amount of Input Purchased
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4. Case #3: Monopsony in input purchasing and Perfectly Competitive seller
Equilibrium: MVP=MIC at Pt. E
Pricing off supply curve → QMPC and PMPC at Pt. D
MIC E
Supply of Input
$ per unit of input
PMPC D
MVP=PY x MPP
We use MVP instead of MRP curve given P.C. seller
QMPC 4
Amount of Input Purchased
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5. Case #4: Perfect Competition in both input purchasing and product sales
Equilibrium: MVP=Input Price at Pt. F
→ QPC and PPC
MVP=PY x MPP
Input price determined
by input market
$ per unit of input
PPC
QPC 5
Amount of Input Purchased
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