Question: Hello, I need the answer to this question please. 3. (35 pts) A monopolist faces an inverse demand function and a total cost function given

Hello, I need the answer to this question please.

Hello, I need the answer to this question please. 3. (35 pts)

3. (35 pts) A monopolist faces an inverse demand function and a total cost function given by P(Q) = a - bQ2, a > 0 and b > 0 C(Q) = c- dQ, c > 0 and d > 0 where Q > 0 is the number of units produced and sold, and a, b, c and d are, as indicated, positive parameters. (a) Write the profit function II(Q) and show that it is strictly concave for Q > 0. Is the profit function strictly monotonic? Why or why not? Justify your answer. (b) Find the profit-maximizing level of output Q*. Show, using comparative static analysis, how an increase in (i) parameter b and (ii) parameter d, affects the profit-maximizing level of output Q*. Do you expect these results? Justify your answer. Now suppose (for the remaining parts: c, d and e), that a - 46, b - 2, c - 94 and d - 50. (c) Calculate the numerical value of Q* and the maximum value of the profit. Graph the profit function (for Q > 0) indicating all the critical points (intercepts and maximum point). (d) Find the second order (n = 2) Taylor polynomial and the error (remainder) of the profit function II(Q) around Q = 1. (e) Show that the second order Taylor polynomial is a strictly concave function and find the output level Q7 at which it achieves its global maximum. In the same graph of part (c), graph the second order Taylor polynomial indicating all the critical points (intercepts and maximum point)

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