Degree of monopoly power using lerner index

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A monopolist faces the demand curve p = 11-Q , where Q is measured in thousands of units. The monopolist has a constant average cost of $6 per unit.

a) Calculate the firm's degree of monopoly power using the Lerner index?

b) A government regulatory agency sets price ceiling of $7 per unit. Find quantity produced? Profit? What happen to the degree of monopoly power?

Reference no: EM1312447

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