Monday

April 21, 2014

April 21, 2014

Posted by **too old** on Wednesday, November 11, 2009 at 9:15pm.

a. Find the monopolist's profit maximizing output and price

b.Calculate the monopolist's profit.

c.What is the Lerner Index for this industry?

- To: Economyst - Can you please help me? -
**economyst**, Thursday, November 12, 2009 at 10:36amFirst, (And I hope this clears up confusion rather than add to it), I like to re-arrange the equation such that P is a function of Q. (When you graph a demand function, you always put P on the y-axis, Q on the x-axis). Re-arranging terms in your demand function. P=500-Qd. Total Revenue is P*Q = 500Q - Q^2. So, marginal revenue is MR=500-2Qd.

a) always always always. MC=MR.

So, 500-2Qd = 50. Solve for Qd. I get Qd=225. Plug this into the demand equation. I get P=275.

b) Total profit is Qotal revenue - Total costs. So profit=(275*225) - (50*225) = $50,625

c) the Lerner index is (P-MC)/P or (275-50)/275 = .8182

**Related Questions**

Economics - Suppose the demand curve for a monopolist is Qd = 500 – P, and the ...

Economics - . Suppose the demand curve for a monopolist is QD =500 - P, and the ...

economics - Suppose the demand curve for a monopolist is QD = 500 − P, and...

Economics/Algebra - The demand curve for a monopolist is Qd = 500 - P and the ...

Economics/Math - The demand curve for a monopolist is Qd = 500 - P and the ...

Economics - Suppose the demand curve for a monopolist is Qd = 500 – P, and the ...

Economics/Algebra - A monopolist has a constant marginal and average cost of $10...

Econ - If a pure monopolist can price discriminate by separating buyers into two...

economics - Suppose a monopolist faces an inverse demand function P=100-1/2Q, ...

economics - A monopolist faces an upward-sloping marginal cost curve. Its ...