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    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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    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.