Q3Given =-Q/PP/Q and slope of the iso-profit demand curve is given by -((P-MC))/Q,where P denotes the price of the normal good, Q denotes the quantity demanded, MC is the marginal cost of producing the good, and determines the demand elasticity of good. Answer the following questions:

a)Using the iso-profit curve, show and explain the relationship between elasticity of demand and markup that monopolist charges (Hint: Recall that the equilibrium is the point of tangency between the demand curve and iso-profit curve) [5]

b)How and why does the deadweight loss change with the elasticity of the product? Illustrate your answer with appropriate well-labelled figures. [5]