Question 3 A monopolist faces the demand curve P = 18-Q, where P is measured in rands per unit and Q in thousands of units. The monopolist has a constant average cost of R6 per unit. 3.1 What are the monopolist's profit-maximising price and quantity and what is its resulting profit? 3.2 Calculate the firm's degree of monopoly power using the Lerner index.

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter14: Monopoly
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Question 3
A monopolist faces the demand curve P= 18-Q, where P is measured in rands per unit and Q in thousands
of units. The monopolist has a constant average cost of R6 per unit.
3.1 What are the monopolist's profit-maximising price and quantity and what is its resulting profit?
3.2 Calculate the firm's degree of monopoly power using the Lerner index.
Transcribed Image Text:Question 3 A monopolist faces the demand curve P= 18-Q, where P is measured in rands per unit and Q in thousands of units. The monopolist has a constant average cost of R6 per unit. 3.1 What are the monopolist's profit-maximising price and quantity and what is its resulting profit? 3.2 Calculate the firm's degree of monopoly power using the Lerner index.
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