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A monopolist faces a demand function P = Q-.5 and total cost function C = .1Q + 2 Compose a mathematical expression for marginal revenue
A monopolist faces a demand function P = Q-.5 and total cost function C = .1Q + 2
- Compose a mathematical expression for marginal revenue as a function of Q
- Write mathematical expressions for marginal, average variable cost and average total cost as functions of Q
- What profit maximizing output will the monopolist produce and what price will be charged?
- Calculate the monopolist's economic profit or loss. Would the monopolist be better off producing zero? Why or why not?
- Calculate the Lerner index of monopoly power for this case.
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