A monopolist faces the following demand curve P=222-2Q. The monopolist’s

Question

A monopolist faces the following demand curve P=222-2Q. The monopolist’s cost is given by C=2Q.

(a) Calculate the profit-maximizing quantity and the corresponding price. What is theÂ

resulting profit/loss. Calculate the monopolist’s markup.

(b) Calculate the profit-maximizing quantity and the corresponding price if this firmÂ

were competitive and charged marginal-cost-prices? What is the resulting profit/loss.Â

Calculate the firm’s markup.Â

(c) Compare the results to (a) and (b) and calculate the deadweight loss caused by theÂ

monopoly.

Explanation / Answer

I don't think I can help you with all of them but here is as much as I know:A) INELASTIC. In order to find elasticity of demand we need to take the derivative of Q with respect to p like so:Q = 1 - pdQ/dp = -1(note: if you don't know how to find derivatives I suggest you ask how its done in the precalculus section or just google it).Once we have that derivative, we multiply it by p/Q like so:-1 x p/QNow normally we would plug in given values into p and Q, but no values are given. HOWEVER, no mat

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