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a 1 J I J. 1. Suppose a monopolist faces a market demand curve given by P = 50 Q. Marginal cost is initially equal
a 1 J I J. 1. Suppose a monopolist faces a market demand curve given by P = 50 Q. Marginal cost is initially equal to zero and constant. a. Calculate the prot maximizing price and quantity. Use the Lerner index to calculate the price elasticity of demand at this point. b. Now suppose marginal cost increases to MC 2 10 while demand and marginal revenue remain constant. Calculate the new prot maximizing price, quantity, and the new values of the price elasticity of demand and deadweight loss
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