2. Consider that a monopolist operates with total costs of TC = cQ and faces the constant

elasticity demand curve P = Q^??

a. What are the first- and second-order conditions for a profit maximum? When

does the second-order condition hold? (This just means to set up your

maximization problem, find the first order condition and check second order. For

the second order to hold - this is where you may have to restrict ?. )

b. Solve for the profit-maximizing level of output and price.

c. Find and sign the comparative statics for a change in marginal cost. (Do this for both price and quantity)