Question
Hawkins MicroBrewery has a monopoly on Oatmeal Stout in the local market.The demand is Qd = 100 - 2P. Hawkins marginal cost of producing Oatmeal
Hawkins MicroBrewery has a monopoly on Oatmeal Stout in the local market.The demand is Qd = 100 - 2P.
Hawkins marginal cost of producing Oatmeal Stout is MC(Q) = 5 +0.5Q.Explain
a. Determine the marginal revenue function for MicroBrewery. (Hint: you need to solve the demand equation for P first)
b.Calculate Hawkins profit maximizing output and price.
c. Calculate the Lerner Index. What does the Lerner Index tell us?
d.Calculate the price elasticity of demand at the monopoly price. Does this monopolist operate along the elastic portion of the demand curve?
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Macroeconomics
Authors: David Colander
8th edition
978-0078004407, 78004403, 978-0077247171, 77247175, 978-0077307110
