A monopoly faces the inverse demand function: p = 100 - 2Q, with the corresponding marginal revenue function, MR = 100 - 4Q. The firm's total cost of production is C = 50 + 10Q + 3Q2, with a corresponding marginal cost of MC = 10 + 6Q.
	p	=	100	-	2	Q
	MR	=	100	-	4	Q
	C	=	50	+	10	Q	+	3	Q2
	MC	=	10	+	6	Q
a)	Calculate the prices, price elasticity of demand, revenues, marginal revenues, costs, marginal costs, and profits for Q =1, 2, 3, ..., 15. Using the MR = MC rule, determine the profit-maximizing output and price for the firm and the consequent level of profit.
b)	Calculate the Lerner Index of monopoly power at the profit-maximizing level of output. Determine the type of the relationship with the value of the price elasticity of demand at the profit-maximizing level of output.
c)	Now suppose that a specific tax of 20 per unit is imposed on the monopoly. Fill in the second part of the table in part (a) (with the 2 subscript denoting the cost, marginal cost, and profit level with the specific tax). Determine the effect on the monopoly's profit-maximizing price.
	Tax	=	$20
		a)							c)
	Q	p		R	MR	C1	MC1	1	C2	MC2	2
	1	$98		$98	$96	$63	$16	$35	$83	$36	$15
	2	$96		$192	$92	$82	$22	$110	$122	$42	$70
	3	$94		$282	$88	$107	$28	$175	$167	$48	$115
	4	$92		$368	$84	$138	$34	$230	$218	$54	$150
	5	$90		$450	$80	$175	$40	$275	$275	$60	$175
	6	$88		$528	$76	$218	$46	$310	$338	$66	$190
	7	$86		$602	$72	$267	$52	$335	$407	$72	$195
	8	$84		$672	$68	$322	$58	$350	$482	$78	$190
	9	$82		$738	$64	$383	$64	$355	$563	$84	$175
	10	$80		$800	$60	$450	$70	$350	$650	$90	$150
	11	$78		$858	$56	$523	$76	$335	$743	$96	$115
	12	$76		$912	$52	$602	$82	$310	$842	$102	$70
	13	$74		$962	$48	$687	$88	$275	$947	$108	$15
	14	$72		$1,008	$44	$778	$94	$230	$1,058	$114	-$50
	15	$70		$1,050	$40	$875	$100	$175	$1,175	$120	-$125

The optimal output, where MR=MC is___________units. The corresponding price is At this output profit reaches its maximum level of _______ . Lerner Index is _______ The price elasticity of demand at the profit-maximizing output-price combination is Thus, the Lerner Index is the_______of the value of the price elasticity of demand. After a specific tax is imposed on the monopoly the profit-maximizing output is _______ The corresponding price is ________The post-tax optimal profit is ______ .