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Derive an expression for the monopolist marginal

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Reference no: EM132499909

A monopolist's costs are given by C(Q) = 0.1Q + 2, and it faces the demand function P = 1/Q1/2, where Q denotes quantity of a good.

  • Derive an expression (formula) for the monopolist's marginal revenue (MR). 
  • Derive an expression (formula) for the monopolist's marginal cost (MC).
  • What is the firm's profit-maximizing output level, and at what price would it sell this output? Feel free to make use of the expressions for MR and MC derived above to answer this part.
  • Would the firm be better off not producing anything, i.e., setting Q = 0, instead? Justify your answer carefully.
  • Calculate the firm's degree of monopoly power (also known as the Lerner index).

Reference no: EM132499909

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