Question: 1.Consider ademand function for a monopolist is P =25- 0.25Q; total costs are TC =10+5Q + 0.2Q2; marginal revenue is MR =15-2Q; and marginal cost

1.Consider ademand function for a monopolist is P =25- 0.25Q; total costs are TC =10+5Q + 0.2Q2; marginal revenue is MR =15-2Q; and marginal cost is MC =5+ 0.5Q.Answer the following questions.

a)What is theprofit-maximizing rate of outputand price?[10]

b) Calculate the monopolist welfare loss (WL), where1/2*1/and represent price elasticity of demand. [5

c)Use the Lerner index to determine if market power exists. [5]

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