Question: A monopolist faces the demand function Q = 200 - p . The total cost is TC = 100 - 40 Q +5 Q 2.

A monopolist faces the demand functionQ= 200 -p. The total cost isTC= 100 - 40Q+5Q2.

(i)Write down the monopolist's profit as a function of the quantity produced.(6 marks)

(ii)Find the profit-maximising level of production and confirm that your solution is a maximum.(8 marks)

(iii)How does the profit-maximising level of production change if the government imposes a lump sum tax,L?(4 marks)

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