posted by Em on .
Suppose the demand curve for a monopolist is
QD = 500 − P, and the marginal revenue function
is MR = 500 − 2Q. The monopolist has a constant
marginal and average total cost of $50 per unit.
a.Find the monopolist’s profit-maximizing output
b. Calculate the monopolist’s profit.
c. What is the Lerner Index for this industry?
I am not sure about the answer but I think that for profit maximizing output . MR = MC , therefore 500-2Q=50 ( MC = 50 per unit ) , after calculating , we get the output of 275 and the price of 225. The profit is 48,125.