Question

The demand for the goods offered by a monopolist can be determined by the inverse demand function ?(?) = 8 - 2/3 q, where ? describes the offered is quantity. The cost function of the monopolist is:
?(?) = 1/3q² + 2q + 1

a) Please calculate the profit-maximizing production quantity ?^M, the profit-maximizing prize ?^M and the corresponding profit ?^M
of the monopolist.
b) Now please display this situation graphically and then determine the Consumer and producer surplus from this situation.
c) Calculate the learner index in the monopoly solution and show that in the "Inverse Elasticity Rule" applies to this monopoly solution.
(d) Please explain what happens to the price if the general Demand elasticity increased.

Answer 1