Question 3

Question 3 Bunter was asked the following: A Soma producing monopolist faces an inverse demand curve 1) = 100 2g. The cost it incurs to produce q units of Soma is 2q2. Use the markup formula to determine its prot maximizing price. Here is his solution: The elasticity of demand is 10532;). unit. The markup formula says that The seller has a constant marginal cost of $2 a 132 1002p 7:7 : p2=50p 3 p=26 Is Bunter's solution correct? If not, what is the correct solution and what are the mistakes that Bunter has made