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3. The monopolist faces a demand curve given by D(p) = 27p3. Its cost function is c(q) = 2q. What is its profit maximizing output

3. The monopolist faces a demand curve given by D(p) = 27p3. Its cost function is c(q) = 2q. What is its profit maximizing output level and price? (5 Marks)

What the profit maximizing output level and price if the monopolist had a capacity constraint that limited output to q = 1.5? Show necessary conditions (5

What is the shadow price of capacity? (2 Marks)

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