# Lerner Index: Finding Monopolist's Profit Maximizing Output

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Suppose the demand curve for a monopolist is QD = 500 - P, and the marginal revenue function is MR = 500- 2Q. The monopolist has a constant marginal and average total cost of $50 per unit.

a. Find the monopolist's profit-maximizing out-put and price.

b. Calculate the monopolist's profit.

c. What is the Lerner Index for this industry?

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Solution:

a. Find the monopolist's profit-maximizing out-put and price.

For profit maximization, a monopolist sets his output in ...

#### Solution Summary

This solution describes the steps for determining monopolist's profit maximizing output and price with calculations. It also explains the steps for calculating Lerner Index for the industry.

$2.49