A monopolist faces the demand curve P = 18 – Q, where P is measured in rands per unit and Q in thousands of units. The monopolist has a constant average cost of R6 per unit. 3.1 What are the monopolist’s profit-maximising price and quantity and what is its resulting profit? (8) 3.2 Calculate the firm’s degree of monopoly power using the Lerner index.
A monopolist faces the demand curve P = 18 – Q, where P is measured in rands per unit and Q in thousands of units. The monopolist has a constant average cost of R6 per unit. 3.1 What are the monopolist’s profit-maximising price and quantity and what is its resulting profit? (8) 3.2 Calculate the firm’s degree of monopoly power using the Lerner index.
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter12: Monopoly
Section: Chapter Questions
Problem 3DQ
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A monopolist faces the demand curve P = 18 – Q, where P is measured in rands per unit and Q in thousands of units. The monopolist has a constant average cost of R6 per unit.
3.1 What are the monopolist’s profit-maximising price and quantity and what is its resulting profit? (8)
3.2 Calculate the firm’s degree of monopoly power using the Lerner index.
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