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Approximate the degree of monopoly power

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Reference no: EM132264195

You have the following information about a monopolist

p = 20 - 2q (1)

MR = 20 - 4q (2)

MC = 8 (3)

where equation (1) denotes the monopolist demand curve, equation (2) denotes its the marginal revenue function, and equation (3) is the marginal cost, assumed to be constant here.

(i) Use the Lerner index to approximate the degree of monopoly power.

(ii) Calculate the deadweight loss.

Reference no: EM132264195

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