Question: A monopolist faces a demand function P = Q-.5 and total cost function C = .1Q + 2 Compose a mathematical expression for marginal revenue

A monopolist faces a demand function P = Q-.5 and total cost function C = .1Q + 2

  1. Compose a mathematical expression for marginal revenue as a function of Q
  2. Write mathematical expressions for marginal, average variable cost and average total cost as functions of Q
  3. What profit maximizing output will the monopolist produce and what price will be charged?
  4. Calculate the monopolist's economic profit or loss. Would the monopolist be better off producing zero? Why or why not?
  5. Calculate the Lerner index of monopoly power for this case.

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