(9) Suppose a monopolist faces a market demand curve given byP = 50 -Q. Marginal cost is initially equal to zero and constant.

a. (5) Calculate the profit-maximizing price and quantity. Use the Lerner index to calculate the price elasticity of demand at this point. What is the amount of deadweight loss associated with this monopoly?

b. (4) Now suppose marginal cost increases toMC = 10 while demand and marginal revenue remain constant. Calculate the new profit-maximizing price, quantity, and the new values of the price elasticity of demand and deadweight loss.